About Statutory Compliances

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Change in PF contribution
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Dear All

Need some clarification on change in Employer & Employee contribution to PF:

Employer and employee is currently contributing 12% of basic into PF (basic being higher than Rs. 6500/-); and employee now wants to restrict his/her contribution now to only 12% of Rs. 6500/- basic, ie. Rs. 780/- pm. Example -- Current Basic on which PF contributions are made is Rs. 15000 = Employer's contribution to PF is Rs. 1800. This method was applied last 6-7 years. Now both employer and employees (existing) would like to change this contribution to Rs. 780 each (Basic Rs. 6500*12%). Can this change in contribution be done without changing employee's CTC?

Purpose behind this request is that the employee wants a higher take home package. [ He will get his the amount from his reduced PF deductions plus the employer's reduced contributions as increased take home (net) sal.]

What are the implications from a statutory standpoint to implementing this change?

Appreciate some inputs on this

Regards

Dear All,

As per statute the company is bound to pay PF contribution upto rs 6500/- but beyond the said amount it is absolutely company's discretion to pay or not to pay the matching amount. There are many companies who are paying PF contribution on basic +DA exceeding Rs 6500/-. It all depends on the Company. Since PF is a social security scheme and also keeping in view the financial distress a person might face at the old age most of the big MNCs pay the PF contribution on actual basic + DA.

Home > Provident Fund > PF contribution – company policy cannot overrule the law
PF contribution – company policy cannot overrule the law
February 22, 2010 Gautham Leave a comment Go to comments
According to Section 6 of the Employees Provident Fund and Miscellaneous Provisions Act, 1952, the provident fund (PF) contribution is to be calculated