Clarification for EPF - we want to decrease Basic from 24,000/- to 15,000/- and PF 2,880/- to 1,800/-

Hello Sir,

This is Srinivas. I have some doubts about PF. We are currently paying PF based on the current basics. However, the management now wants to decrease the maximum limit of basics to ₹15,000. Please see the below example:

E1 - The current basic salary is ₹24,000, and the PF contribution is ₹2,880.
Now, we are looking to reduce the basic salary from ₹24,000 to ₹15,000 and adjust the PF from ₹2,880 to ₹1,800.

Please advise if we can make this change or not.

Management is absolutely right. As per the EPFO Act and rules, the maximum contribution will be ₹15,000. Management is voluntarily depositing more. Irrespective of PF Gross (Basic, DA, other allowances regularly paid other than HRA, etc.), management can restrict the contribution up to ₹15,000 per month, i.e., ₹18,000 per month contribution.

S K Bandyopadhyay (WB, Howrah) CEO - USD HR Solutions

Rs. 15,000/- is the statutory ceiling for PF deduction. Hence, you can go ahead with restructuring salary.

At the same time, Section 12 of the PF Act states that the employer should not reduce wages for the purpose of decreasing the employer's contribution towards PF. Therefore, it is advisable to check with the PF office in your area before proceeding with restructuring salaries or wages.

Rs. 15,000/- is the statutory ceiling for PF deduction. Hence, you can go ahead with restructuring the salary.

At the same time, Section 12 of the PF Act states that the employer should not reduce wages for the purpose of decreasing the employer's contribution towards PF. Therefore, it is advisable to check with the PF office in your area before proceeding with restructuring salaries or wages.