VPF Deduction Percentage: Fixed or Earned Basic?
Is the VPF deduction percentage based on the fixed basic salary or the earned basic salary? For example, if the fixed basic is 4000, a certain percentage applies; however, if the basic is lower due to absenteeism, such as 3500, how does it affect the deduction? Please reply to me and also send any notifications on this.
Regards,
Manjunath
From India, Bangalore
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Is the VPF deduction percentage based on the fixed basic salary or the earned basic salary? For example, if the fixed basic is 4000, a certain percentage applies; however, if the basic is lower due to absenteeism, such as 3500, how does it affect the deduction? Please reply to me and also send any notifications on this.
Regards,
Manjunath
From India, Bangalore
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Please note that you can opt for VPF up to 50% of your basic salary. I hope you are aware of the standard percentage of MPF. For further details, kindly refer to the PF & Misc Provisions 1952 Act.
Regards,
Abhay Raj
From India, Mumbai
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19Regards,
Abhay Raj
From India, Mumbai
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One can contribute towards VPF from 2% to 90% of your basic salary as per the PF Act, 1952. Basic pay as per the Act includes basic salary, dearness allowance, and retaining allowance, if applicable.
Regards,
Savithri
From India, Delhi
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Regards,
Savithri
From India, Delhi
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Voluntary Provident Fund (VPF) Contribution Rate
Every employee has the option to pay their PF contribution at a higher rate if they wish. There is no ceiling on the voluntary higher rate. An employee's higher contribution does not affect the employer's contribution, which remains limited to the statutory liability. For instance, against the compulsory rate of 12%, if a member opts to pay their contribution at 20%, while their contribution will be deducted at the 20% rate, the employer will still pay their contribution at the 12% rate only.
The scheme simply states that if any employee desires, their contribution can be above the applicable rate; it is silent on the procedure for doing so. As per the earlier rule, the employee was required to obtain PF authority's pre-approval in this regard in Form 4A, but that requirement has been removed. Now, since no formal procedure is prescribed, it implies that as and when an employee intimates their employer in writing that from a given month, their PF contribution should be deducted at the indicated higher rate, the employer will start deducting and paying the contribution at that rate.
In a similar way, one can revise their option (to increase or decrease their voluntary contribution) at any time. However, from an accounting point of view, it would be proper for the employee to change the rate of their optional contribution from the beginning of the coming financial year—that is, from the pay of March (in any year) to be remitted to the PF office in April.
Regards,
Murthy
[Phone Number Removed For Privacy Reasons]
Email: [Email Removed For Privacy Reasons]
From India, Hyderabad
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Every employee has the option to pay their PF contribution at a higher rate if they wish. There is no ceiling on the voluntary higher rate. An employee's higher contribution does not affect the employer's contribution, which remains limited to the statutory liability. For instance, against the compulsory rate of 12%, if a member opts to pay their contribution at 20%, while their contribution will be deducted at the 20% rate, the employer will still pay their contribution at the 12% rate only.
The scheme simply states that if any employee desires, their contribution can be above the applicable rate; it is silent on the procedure for doing so. As per the earlier rule, the employee was required to obtain PF authority's pre-approval in this regard in Form 4A, but that requirement has been removed. Now, since no formal procedure is prescribed, it implies that as and when an employee intimates their employer in writing that from a given month, their PF contribution should be deducted at the indicated higher rate, the employer will start deducting and paying the contribution at that rate.
In a similar way, one can revise their option (to increase or decrease their voluntary contribution) at any time. However, from an accounting point of view, it would be proper for the employee to change the rate of their optional contribution from the beginning of the coming financial year—that is, from the pay of March (in any year) to be remitted to the PF office in April.
Regards,
Murthy
[Phone Number Removed For Privacy Reasons]
Email: [Email Removed For Privacy Reasons]
From India, Hyderabad
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Provident Fund - Excluded Employee - Definition.pdf