📌 HR Discussion Point – EPF & VPF Case Study
👤 Scenario:
An employee whose Basic + DA is ₹89,900 wants to contribute the full 12% EPF and additional VPF from his share.
At the same time, the company (employer) says that we will contribute to EPF/EPS only considering ₹10,000 as basic amount (i.e. ₹1,200 total – ₹833 EPS + ₹367 EPF), which is the statutory limit of the EPF Act.
👇🏼 The question is:
✅ Is this structure legally valid?
✅ Can we keep EPF_WAGES ₹89,900 and EPS_WAGES ₹10,000 in ECR?
✅ Will there be correct reflection in the passbook – employee's full contribution and employer's capped?
✅ Will this create any issue in PF interest and audit compliance?
🧾If anyone has implemented such a structure then please share practical experience or sample entries.
Thank you! 🙏
Raj Shelar
From India, Pune
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👤 Scenario:
An employee whose Basic + DA is ₹89,900 wants to contribute the full 12% EPF and additional VPF from his share.
At the same time, the company (employer) says that we will contribute to EPF/EPS only considering ₹10,000 as basic amount (i.e. ₹1,200 total – ₹833 EPS + ₹367 EPF), which is the statutory limit of the EPF Act.
👇🏼 The question is:
✅ Is this structure legally valid?
✅ Can we keep EPF_WAGES ₹89,900 and EPS_WAGES ₹10,000 in ECR?
✅ Will there be correct reflection in the passbook – employee's full contribution and employer's capped?
✅ Will this create any issue in PF interest and audit compliance?
🧾If anyone has implemented such a structure then please share practical experience or sample entries.
Thank you! 🙏
Raj Shelar
From India, Pune
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The structure you've mentioned is legally valid. As per the EPF Act, the employer is only obligated to contribute up to ₹1,200 (12% of ₹10,000) towards the employee's EPF. Anything beyond that is voluntary and can be contributed towards the Voluntary Provident Fund (VPF).
Here are the answers to your specific questions:
- Yes, the structure is legally valid as the employer is adhering to the statutory limit set by the EPF Act.
- Yes, you can keep EPF_WAGES at ₹89,900 and EPS_WAGES at ₹10,000 in the ECR. The EPF_WAGES is the total amount on which the employee's EPF is calculated, and the EPS_WAGES is the amount on which the employer's contribution is calculated.
- Yes, the passbook will correctly reflect the employee's full contribution and the employer's capped contribution. The passbook will show two separate entries for the employer's and employee's contributions.
- No, this will not create any issue in PF interest and audit compliance as long as the employer is contributing the statutory limit and the employee's contribution does not exceed the salary amount.
Remember, the VPF is a voluntary contribution and does not have a statutory limit. The employee can choose to contribute any amount up to 100% of his salary (Basic + DA) towards VPF. However, the employer is not obligated to match this contribution.
For more information, you can refer to the EPF Act and the guidelines provided on the EPFO website https://www.epfindia.gov.in.
From India, Gurugram
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73Here are the answers to your specific questions:
- Yes, the structure is legally valid as the employer is adhering to the statutory limit set by the EPF Act.
- Yes, you can keep EPF_WAGES at ₹89,900 and EPS_WAGES at ₹10,000 in the ECR. The EPF_WAGES is the total amount on which the employee's EPF is calculated, and the EPS_WAGES is the amount on which the employer's contribution is calculated.
- Yes, the passbook will correctly reflect the employee's full contribution and the employer's capped contribution. The passbook will show two separate entries for the employer's and employee's contributions.
- No, this will not create any issue in PF interest and audit compliance as long as the employer is contributing the statutory limit and the employee's contribution does not exceed the salary amount.
Remember, the VPF is a voluntary contribution and does not have a statutory limit. The employee can choose to contribute any amount up to 100% of his salary (Basic + DA) towards VPF. However, the employer is not obligated to match this contribution.
For more information, you can refer to the EPF Act and the guidelines provided on the EPFO website https://www.epfindia.gov.in.
From India, Gurugram
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