Clarification on Changes in PF Contributions
I need some clarification on changes in Employer and Employee contributions to PF. Currently, both the employer and employee are contributing 12% of the basic salary to the PF (basic being higher than Rs. 6500). The employee now wishes to restrict their contribution to only 12% of the Rs. 6500 basic, i.e., Rs. 780 per month.
The purpose behind this request is that the employee seeks a higher take-home package. They will receive the amount from their reduced PF deductions, along with the employer's reduced contributions, as an increased net salary.
What are the implications from a statutory standpoint regarding the implementation of this change? Please provide details on the procedure for changing the contribution from the maximum to the minimum.
I would appreciate any insights on this matter.
Thank you.
From India, Bangalore
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7I need some clarification on changes in Employer and Employee contributions to PF. Currently, both the employer and employee are contributing 12% of the basic salary to the PF (basic being higher than Rs. 6500). The employee now wishes to restrict their contribution to only 12% of the Rs. 6500 basic, i.e., Rs. 780 per month.
The purpose behind this request is that the employee seeks a higher take-home package. They will receive the amount from their reduced PF deductions, along with the employer's reduced contributions, as an increased net salary.
What are the implications from a statutory standpoint regarding the implementation of this change? Please provide details on the procedure for changing the contribution from the maximum to the minimum.
I would appreciate any insights on this matter.
Thank you.
From India, Bangalore
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Contribution to Higher Pay and Reverting to Statutory Limit
Since any request for contributing to a higher pay (more than Rs. 6500/- p.m) shall be considered by the P.F. Department only on a joint request by the employee and the employer under Para 26 of the P.F. Scheme, similarly, when an employee desires to revert to the statutory limit of Rs. 6500/-, it shall also be, in my view, by the joint request by the employee and the employer to the P.F. Department.
Even after reverting to the lower limit of pay, the P.F. Act is complied with, and therefore, I do not envisage any problem regarding any breach of the Act.
Regards,
B. Saikumar
HR & Labour Law Consultant
Chipinbiz Consultancy Pvt. Ltd.
Mumbai
Mob: [Phone Number Removed For Privacy Reasons]
From India, Mumbai
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Since any request for contributing to a higher pay (more than Rs. 6500/- p.m) shall be considered by the P.F. Department only on a joint request by the employee and the employer under Para 26 of the P.F. Scheme, similarly, when an employee desires to revert to the statutory limit of Rs. 6500/-, it shall also be, in my view, by the joint request by the employee and the employer to the P.F. Department.
Even after reverting to the lower limit of pay, the P.F. Act is complied with, and therefore, I do not envisage any problem regarding any breach of the Act.
Regards,
B. Saikumar
HR & Labour Law Consultant
Chipinbiz Consultancy Pvt. Ltd.
Mumbai
Mob: [Phone Number Removed For Privacy Reasons]
From India, Mumbai
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As the employee is requesting to restrict his P.F. contribution as per the P.F. Act, you can immediately deduct his P.F. at 12% on Rs. 6500/-. There is no need to inform anybody or the P.F. office. Please proceed with this action.
Regards,
D. Gurumurthy
LL. HR & IR Consultant
From India, Hyderabad
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Regards,
D. Gurumurthy
LL. HR & IR Consultant
From India, Hyderabad
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Dear Gurumurthy & Saikumar,
Please, can you let me know when the audit will happen? The labor inspector will see the wage register and details of basic & DA payouts, including the monthly basic & DA amounts.
Example of Wage Register:
Basic PF EPF Pension Remark
Amount 12% 3.67% 8.33%
14600 1752 1211 541 This should be as per actual basic payout.
14600 780 239 541 This is as per what you are saying.
So please explain to me.
Regards,
From India, Madras
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Please, can you let me know when the audit will happen? The labor inspector will see the wage register and details of basic & DA payouts, including the monthly basic & DA amounts.
Example of Wage Register:
Basic PF EPF Pension Remark
Amount 12% 3.67% 8.33%
14600 1752 1211 541 This should be as per actual basic payout.
14600 780 239 541 This is as per what you are saying.
So please explain to me.
Regards,
From India, Madras
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You have calculated the PF contribution for Rs. 6,500/-. Here you are abiding by the PF Act. So, there is no issue; you can contribute Rs. 780 on either side. Just inform the Inspector that you have kept Rs. 6,500/- as the wage ceiling for PF calculation for employees.
From India, Mumbai
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From India, Mumbai
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Dear Gurumurthy & Saikumar,
Please, can you let me know when the audit will happen? The labor inspector will see the wage register and basic & DA payout details, along with the monthly basic & DA paid out.
For Example:
Basic PF EPF Pension Remark
Amount 12% 3.67% 8.33%
14600 1752 1211 541 This should be as per actual Basic payout.
14600 780 239 541 This is as per what you are saying.
So, please explain it to me.
Sir, I want to know if we can change the basic from the maximum to minimum, as you have given the example. If it is possible, then can any problems arise during the PF inspection?
Regards,
Anil Talwar
HR Executive
[Phone Number Removed For Privacy Reasons]
From India, New Delhi
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Please, can you let me know when the audit will happen? The labor inspector will see the wage register and basic & DA payout details, along with the monthly basic & DA paid out.
For Example:
Basic PF EPF Pension Remark
Amount 12% 3.67% 8.33%
14600 1752 1211 541 This should be as per actual Basic payout.
14600 780 239 541 This is as per what you are saying.
So, please explain it to me.
Sir, I want to know if we can change the basic from the maximum to minimum, as you have given the example. If it is possible, then can any problems arise during the PF inspection?
Regards,
Anil Talwar
HR Executive
[Phone Number Removed For Privacy Reasons]
From India, New Delhi
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