Dear All,
I need some clarification on the change in Employer and Employee contributions to PF. Currently, both the employer and employee are contributing 12% of the basic salary into PF (with the basic salary being higher than Rs. 6500). Now, the employee wants to limit their contribution to only 12% of the Rs. 6500 basic, which amounts to Rs. 780 per month. For example, if the current basic salary for PF contributions is Rs. 15000, the employer's contribution to PF is Rs. 1800. This method has been followed for the last 6-7 years. Both the employer and existing employees would like to change the contribution to Rs. 780 each (based on the Rs. 6500*12% calculation). Can this change in contribution be implemented without altering the employee's CTC?
The purpose behind this request is that the employee desires a higher take-home package. They will receive the extra amount from the reduced PF deductions, along with the employer's reduced contributions, as an increased take-home (net) salary.
What are the implications from a statutory standpoint of implementing this change?
I would appreciate some insights on this.
Regards, Prabhakar
From India, Bangalore
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I need some clarification on the change in Employer and Employee contributions to PF. Currently, both the employer and employee are contributing 12% of the basic salary into PF (with the basic salary being higher than Rs. 6500). Now, the employee wants to limit their contribution to only 12% of the Rs. 6500 basic, which amounts to Rs. 780 per month. For example, if the current basic salary for PF contributions is Rs. 15000, the employer's contribution to PF is Rs. 1800. This method has been followed for the last 6-7 years. Both the employer and existing employees would like to change the contribution to Rs. 780 each (based on the Rs. 6500*12% calculation). Can this change in contribution be implemented without altering the employee's CTC?
The purpose behind this request is that the employee desires a higher take-home package. They will receive the extra amount from the reduced PF deductions, along with the employer's reduced contributions, as an increased take-home (net) salary.
What are the implications from a statutory standpoint of implementing this change?
I would appreciate some insights on this.
Regards, Prabhakar
From India, Bangalore
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Hi Prabhakar, we are also looking for the same information but have not been able to find it. Have you found the information about it? Please share it with me as well if you have received the information.
Thanks & Regards,
Prashant Kumar Pandey
From India, Delhi
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Thanks & Regards,
Prashant Kumar Pandey
From India, Delhi
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Dear Friends,
We also thought the same a long time ago. Our PF & ESIC consultant advised us that it can be done easily, but it is best to start at the beginning of the new financial year to avoid complications with taxation and Form-16 for employees. Regarding statutory implications, he mentioned that although it is not required, you can provide a letter to the PF department stating such changes. However, we didn't make the change due to a few other reasons.
Regards,
Nishu
From India, New Delhi
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6We also thought the same a long time ago. Our PF & ESIC consultant advised us that it can be done easily, but it is best to start at the beginning of the new financial year to avoid complications with taxation and Form-16 for employees. Regarding statutory implications, he mentioned that although it is not required, you can provide a letter to the PF department stating such changes. However, we didn't make the change due to a few other reasons.
Regards,
Nishu
From India, New Delhi
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I'd like to add one more twist to the original question. Half of the existing employees are willing to sign an undertaking that in the future, their PF will be computed with respect to the Basic Pay of Rs. 6500 per month, while the other half wants to continue with the existing methodology of PF being computed with respect to full wages.
From United States, Minneapolis
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From United States, Minneapolis
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