Hello, Is PF a non-mandatory thing? Can some companies opt not to pay PF? Is there some other alternative to PF? — — - sree
From India, New Delhi
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9From India, New Delhi
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Hello Preet,
What I know about PF, I would like to share with you.
1. It is non-mandatory for companies with up to 19 employees. When a company hires the 20th employee, it becomes mandatory as per government rules.
2. If employees do not wish to participate, it is their prerogative. In that case, the employer should obtain consent from the employees, and records must be maintained as proof.
3. The PF contribution typically consists of 12% from the employee's share and 12% from the employer's share. However, in IT sectors where CTC is considered, the entire 24% is borne by the employee.
4. Once an employee is enrolled in PF, they cannot stop the contribution midway unless they leave the job.
As per my knowledge,
Cordially,
Preet
From India, Bangalore
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What I know about PF, I would like to share with you.
1. It is non-mandatory for companies with up to 19 employees. When a company hires the 20th employee, it becomes mandatory as per government rules.
2. If employees do not wish to participate, it is their prerogative. In that case, the employer should obtain consent from the employees, and records must be maintained as proof.
3. The PF contribution typically consists of 12% from the employee's share and 12% from the employer's share. However, in IT sectors where CTC is considered, the entire 24% is borne by the employee.
4. Once an employee is enrolled in PF, they cannot stop the contribution midway unless they leave the job.
As per my knowledge,
Cordially,
Preet
From India, Bangalore
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Very good topic, would appreciate if somebody could shed some light on this, for the benefit of all of us.
These days, employees do not like to opt for it as it reduces their take-home pay, and there are administration issues encountered in PF, ranging from withdrawal to transfer.
Best Regards,
Anudeep
From India, Hyderabad
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These days, employees do not like to opt for it as it reduces their take-home pay, and there are administration issues encountered in PF, ranging from withdrawal to transfer.
Best Regards,
Anudeep
From India, Hyderabad
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Hi all,
I would like to suggest www.lexsite.com for legal queries. You can register for free and view online the related laws of India.
Mariya
From India, Madras
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I would like to suggest www.lexsite.com for legal queries. You can register for free and view online the related laws of India.
Mariya
From India, Madras
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Hi everybody,
Preet is absolutely right. PF is applicable in any organization with 20 or more persons employed. PF is deducted at 12% of basic pay of an employee and the same proportion is deposited by the respective employer as well. So, an employee is forcefully saving 24% of his/her basic per month.
Regarding withdrawal of PF, you have to withdraw the forms from any PF office, fill them out, and send them to the respective employers. The employee and employers' contribution columns will be left blank. These will be filled out by the employers, signed by their authorized signatory, and deposited to the respective PF office. In the forms, there is a column asking for the mode of payment. It would be preferable if you choose the option of transferring your PF amount directly to your bank account. The transaction is safe and fast.
From India, Calcutta
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Preet is absolutely right. PF is applicable in any organization with 20 or more persons employed. PF is deducted at 12% of basic pay of an employee and the same proportion is deposited by the respective employer as well. So, an employee is forcefully saving 24% of his/her basic per month.
Regarding withdrawal of PF, you have to withdraw the forms from any PF office, fill them out, and send them to the respective employers. The employee and employers' contribution columns will be left blank. These will be filled out by the employers, signed by their authorized signatory, and deposited to the respective PF office. In the forms, there is a column asking for the mode of payment. It would be preferable if you choose the option of transferring your PF amount directly to your bank account. The transaction is safe and fast.
From India, Calcutta
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Hi,
As observed, there are many companies, including big brands, especially in IT, that do not provide PF to their employees. Everything else is included in the salary breakup. How can a company claim exemption from PF? Also, when we refer to CTC, is PF deducted from that amount only, as it falls under the preview of Cost to the company.
Best Regards,
Anudeep
From India, Hyderabad
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As observed, there are many companies, including big brands, especially in IT, that do not provide PF to their employees. Everything else is included in the salary breakup. How can a company claim exemption from PF? Also, when we refer to CTC, is PF deducted from that amount only, as it falls under the preview of Cost to the company.
Best Regards,
Anudeep
From India, Hyderabad
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Companies that have a scheme better than the PF can apply for exemption. Also employees paid more than Rs.6500 per month can also be exempted.
From India, Madras
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From India, Madras
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I would appreciate if any body could throw light on whether a person should go for PF or not. Regards, Ratii Gupta
From India, Pune
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From India, Pune
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Hi Ratii,
I see you have just joined and have become active as well!! A grand welcome to you and hope this forum proves to be a learning one as it has been for all of us.
Would like to thank Mariya, Atrita, Anudeep, Preet for adding points to this thread of discussion.
This question was also posed by the potential employee, and here is how I justified the same:-
1. Applicability of PF:
APPLICABILITY OF EMPLOYEES' PROVIDENT FUND AND MISCELLANEOUS PROVISIONS ACT '1952
The Employees' Provident Fund and Miscellaneous Provisions Act 1952 applies to the whole India except Jammu & Kashmir.
Employees' Provident Fund and Miscellaneous Provisions Act 1952 is applicable to:
Every establishment which is engaged in any one or more of the industries specified in Schedule I of the Act or any activity notified by the Central Government in the Official Gazette. (List of Industries/Establishments)
Employing 20 or more persons.
Cinema Theatres employing 5 or more persons.
2. The Act does not apply to:
The cooperative societies employing less than 50 persons and working without the aid of power. 16(1)(a)
The establishment to which this Act applies shall continue to be governed by this Act, even if the number of employees falls below 20 at a later date. [1(5)].
So whether one likes it or not, we are all bound by it, and by default, if the company has more than 20 employees, then PF is applicable.
2. Forced savings - someone had mentioned this. Yes, one gets 24% of the Basic & DA credited to one PF account, which otherwise would get spent by the employee if it were to fall into his hands.
3. Tax savings: - The employee's contribution adds to the tax shield of One lac limit under section 80 CC. Here it provides 30-40% on the average to the limit to save hard money being taxed.
4. Rate of interests: One gets interest of 8.5% on the above amount, and every year one gets the PF slip entailing the details & balance.
Keeping the above factors in mind, it is advisable for one to opt for PF contribution.
Yes, if one quits the job and after three months, he/she has the option of withdrawing the PF contribution to their respective bank accounts.
Cheers,
Rajat
From India, Pune
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I see you have just joined and have become active as well!! A grand welcome to you and hope this forum proves to be a learning one as it has been for all of us.
Would like to thank Mariya, Atrita, Anudeep, Preet for adding points to this thread of discussion.
This question was also posed by the potential employee, and here is how I justified the same:-
1. Applicability of PF:
APPLICABILITY OF EMPLOYEES' PROVIDENT FUND AND MISCELLANEOUS PROVISIONS ACT '1952
The Employees' Provident Fund and Miscellaneous Provisions Act 1952 applies to the whole India except Jammu & Kashmir.
Employees' Provident Fund and Miscellaneous Provisions Act 1952 is applicable to:
Every establishment which is engaged in any one or more of the industries specified in Schedule I of the Act or any activity notified by the Central Government in the Official Gazette. (List of Industries/Establishments)
Employing 20 or more persons.
Cinema Theatres employing 5 or more persons.
2. The Act does not apply to:
The cooperative societies employing less than 50 persons and working without the aid of power. 16(1)(a)
The establishment to which this Act applies shall continue to be governed by this Act, even if the number of employees falls below 20 at a later date. [1(5)].
So whether one likes it or not, we are all bound by it, and by default, if the company has more than 20 employees, then PF is applicable.
2. Forced savings - someone had mentioned this. Yes, one gets 24% of the Basic & DA credited to one PF account, which otherwise would get spent by the employee if it were to fall into his hands.
3. Tax savings: - The employee's contribution adds to the tax shield of One lac limit under section 80 CC. Here it provides 30-40% on the average to the limit to save hard money being taxed.
4. Rate of interests: One gets interest of 8.5% on the above amount, and every year one gets the PF slip entailing the details & balance.
Keeping the above factors in mind, it is advisable for one to opt for PF contribution.
Yes, if one quits the job and after three months, he/she has the option of withdrawing the PF contribution to their respective bank accounts.
Cheers,
Rajat
From India, Pune
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Hi,
I fully agree with Rajat Sir. In our organization, we too faced the same issue, but we convinced employees. The basic intention of all labor laws is to benefit the employees and create long-term social security. However, individuals in BPOs who frequently change jobs do not perceive it positively. They are not inclined to stay with a particular company for an extended period. We have to persuade them that these laws are for their benefit. Alternatively, we could establish a structure where the Basic + DA exceeds 7500, exempting us from this requirement, and we can seek voluntary consent from employees to not implement it. Nevertheless, it is preferable to comply with the law and enforce the regulations.
Thanks,
Samir
From India, Surat
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I fully agree with Rajat Sir. In our organization, we too faced the same issue, but we convinced employees. The basic intention of all labor laws is to benefit the employees and create long-term social security. However, individuals in BPOs who frequently change jobs do not perceive it positively. They are not inclined to stay with a particular company for an extended period. We have to persuade them that these laws are for their benefit. Alternatively, we could establish a structure where the Basic + DA exceeds 7500, exempting us from this requirement, and we can seek voluntary consent from employees to not implement it. Nevertheless, it is preferable to comply with the law and enforce the regulations.
Thanks,
Samir
From India, Surat
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INTERNATIONAL-W ORKERS-IWs-UNDE R-THE-EMPLOYEES ’-PROVIDENT-FUN D-SCHEME-1952-A ND-THEIR-COMPLI ANCE.pdf
Provident fund.zip
PROVIDENT FUND.rar