Hi, I need a suggestion! Can we reduce the PF contribution to the limit of 15000/-, where currently we are making the contribution of more than 15000/- for both employees and employers? For example, if currently we are calculating the PF on 20000/-, can we now reduce the amount to 15000/-? Is this allowed as per the act? Please provide your inputs. Thanks
From India
Acknowledge(0)
Amend(0)
From India
Acknowledge(0)Amend(0)
Reducing PF Contribution to Rs 15,000: Legal Considerations
Yes, you can do it provided your contribution is on a salary which is not less than Rs 15,000. If you have been deducting PF on Rs 20,000 and now decide to change the PF contributing salary to an amount less than Rs 15,000, say, Rs 12,000, then it will be a violation of Section 12 of the EPF & MP Act. This section states that the employer should not reduce the salary for the purpose of reducing their contribution to PF. However, since the PF authorities cannot demand a contribution on any salary above Rs 15,000, a reduction in PF contributing salary up to Rs 15,000 is permissible. This was clarified by the Supreme Court in Marathwada Gramin Bank's case.
From India, Kannur
Acknowledge(1)
Amend(0)
4526Yes, you can do it provided your contribution is on a salary which is not less than Rs 15,000. If you have been deducting PF on Rs 20,000 and now decide to change the PF contributing salary to an amount less than Rs 15,000, say, Rs 12,000, then it will be a violation of Section 12 of the EPF & MP Act. This section states that the employer should not reduce the salary for the purpose of reducing their contribution to PF. However, since the PF authorities cannot demand a contribution on any salary above Rs 15,000, a reduction in PF contributing salary up to Rs 15,000 is permissible. This was clarified by the Supreme Court in Marathwada Gramin Bank's case.
From India, Kannur
Acknowledge(1)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
EPF-Circular-da ted-23-May-2011 -Splitting-of-M inimum-Wages-fo r-the-Purpose-o f-PF-Contributi on-Not.pdf