Hi,
Our company has recently started with the EPF scheme. My basic pay is exactly 6500/- INR. The employer's contribution to PF is not mentioned in my offer letter or monthly payslip. Can the employer directly start deducting PF at 24% per month without any changes to the overall CTC?
From India, Pune
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Our company has recently started with the EPF scheme. My basic pay is exactly 6500/- INR. The employer's contribution to PF is not mentioned in my offer letter or monthly payslip. Can the employer directly start deducting PF at 24% per month without any changes to the overall CTC?
From India, Pune
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The PF rules specify that salary cannot be reduced to pay PF amount. So, while a 12% deduction from the employee's side will be deducted from your salary, the employer's 12% contribution cannot be deducted. If your CTC includes other items of perquisites and reimbursements that are not shown on the salary slip, they can adjust it as they have already decided your CTC and do not want to increase it. However, they cannot lower your gross salary.
From India, Mumbai
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2638From India, Mumbai
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Thanks for the quick replies. Can you please cite any legal document outlining the points you mentioned?
Also, the company obtained PF registration just last month. However, they claim that since they applied for PF last July, employees are expected to deposit the entire backlog PF contribution for the past months of employment immediately. Is this a legal request? I would greatly appreciate any legal documentation to support this, as most of my colleagues are extremely concerned, considering their total backlog amounts to around a month's entire salary.
Thanks in advance.
From India, Pune
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Also, the company obtained PF registration just last month. However, they claim that since they applied for PF last July, employees are expected to deposit the entire backlog PF contribution for the past months of employment immediately. Is this a legal request? I would greatly appreciate any legal documentation to support this, as most of my colleagues are extremely concerned, considering their total backlog amounts to around a month's entire salary.
Thanks in advance.
From India, Pune
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I believe PF contributions should be made from the time the company becomes eligible for the act. However, seniors may provide better guidance.
Another point to note is that there is no need to worry. Each of you will have a PF Account Number. All PF contributions and the interest earned are tax-free. This serves as a retirement solution and a fixed deposit for later in life. You can always track the amount deposited in your PF Account.
I have shared a link to the PF Act articles and highlighted the key points below:
1. PF Act applies to any organization with more than 20 employees.
2. Once covered under the PF Act, the company remains covered even if the employment drops below 20 later.
3. Employer cannot reduce wages to contribute to your PF without affecting your gross pay. Only a 12% deduction is allowed for your contribution. The company's contribution can be adjusted from other components without reducing your gross pay. If your gratuity, bonus, etc., are part of your CTC, such deductions do not violate statutory compliance.
[EPF Act 1952, EPF Act in India, EPF Rules and Regulations, EPF Rules for Withdrawal](http://www.epf.net.in/epf-act-and-rules.htm)
[EPF India](http://epfindia.com) <link fixed>
From India, Mumbai
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Another point to note is that there is no need to worry. Each of you will have a PF Account Number. All PF contributions and the interest earned are tax-free. This serves as a retirement solution and a fixed deposit for later in life. You can always track the amount deposited in your PF Account.
I have shared a link to the PF Act articles and highlighted the key points below:
1. PF Act applies to any organization with more than 20 employees.
2. Once covered under the PF Act, the company remains covered even if the employment drops below 20 later.
3. Employer cannot reduce wages to contribute to your PF without affecting your gross pay. Only a 12% deduction is allowed for your contribution. The company's contribution can be adjusted from other components without reducing your gross pay. If your gratuity, bonus, etc., are part of your CTC, such deductions do not violate statutory compliance.
[EPF Act 1952, EPF Act in India, EPF Rules and Regulations, EPF Rules for Withdrawal](http://www.epf.net.in/epf-act-and-rules.htm)
[EPF India](http://epfindia.com) <link fixed>
From India, Mumbai
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Dear Ashish_k29,
Here is a simple and to the point answer to your query.
Para 31 of Employees' Provident Funds Scheme 1952 states as under:
Para 31: Employer’s share not to be deducted from the members
Notwithstanding any contract to the contrary the employer shall not be entitled to deduct the employer’s contribution from the wage of a member or otherwise to recover it from him.
From the above it is very clear that your employer can not deduct the employer's share from your salary.
My humble request to all the members of forum that they should give response to any query to the point and not out of context. I do not know whether I can make such kind of request. Still I do it since the members respond without any study and out of context. In one of the thread on PF earlier, I had to write that there is a need of basic inputs / training session to the members.
From India, Mumbai
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Here is a simple and to the point answer to your query.
Para 31 of Employees' Provident Funds Scheme 1952 states as under:
Para 31: Employer’s share not to be deducted from the members
Notwithstanding any contract to the contrary the employer shall not be entitled to deduct the employer’s contribution from the wage of a member or otherwise to recover it from him.
From the above it is very clear that your employer can not deduct the employer's share from your salary.
My humble request to all the members of forum that they should give response to any query to the point and not out of context. I do not know whether I can make such kind of request. Still I do it since the members respond without any study and out of context. In one of the thread on PF earlier, I had to write that there is a need of basic inputs / training session to the members.
From India, Mumbai
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Employer-PF-res trict to wages of Rs 6500.pdf