Dear Sir,
For example: my gross salary is 21000. My basic salary is 12600. My EPF deduction (employee share) is Rs1512 per month. My employer share is Rs.1715. However, our company wants to change the system. We plan to deduct Rs.780 (taking the basic as Rs.6500). The employer share is Rs.885. The gross salary remains unchanged. This change is acceptable to the EPF office. Please clarify.
From India, Mumbai
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3For example: my gross salary is 21000. My basic salary is 12600. My EPF deduction (employee share) is Rs1512 per month. My employer share is Rs.1715. However, our company wants to change the system. We plan to deduct Rs.780 (taking the basic as Rs.6500). The employer share is Rs.885. The gross salary remains unchanged. This change is acceptable to the EPF office. Please clarify.
From India, Mumbai
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Dear Rajan,
As per statutory compliance, EPF deduction from the employee's side is 12% of basic (not more than 6500), and from the employer's side, it is 13.61%. Out of the employer's contribution, 12% is for EPF and EPS, and the remaining 1.61% is for GPF and administrative charges of PF, EPS, and EDLI. I recommend following this rule.
Thank you.
From India, Faridabad
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As per statutory compliance, EPF deduction from the employee's side is 12% of basic (not more than 6500), and from the employer's side, it is 13.61%. Out of the employer's contribution, 12% is for EPF and EPS, and the remaining 1.61% is for GPF and administrative charges of PF, EPS, and EDLI. I recommend following this rule.
Thank you.
From India, Faridabad
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Dear Rohit & Prachi,
I think it's not acceptable in the PF office. Once you have submitted any contributed amount to a particular account, you cannot reduce that amount. For example, if the current employee contribution is 1512/- and you now want to deposit an employee share of 780/-, this is not acceptable.
From India, Dehra Dun
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I think it's not acceptable in the PF office. Once you have submitted any contributed amount to a particular account, you cannot reduce that amount. For example, if the current employee contribution is 1512/- and you now want to deposit an employee share of 780/-, this is not acceptable.
From India, Dehra Dun
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Dear Sir, Shall We start this kind of deduction for new employees?. Is it acceptable?. Please clarify my doubt. Regards, R.N.Rajan.
From India, Mumbai
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From India, Mumbai
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Hi Rajan I agreed with opinion given by Mr Indrajeet here. PF contribution which once started depositing in a particular PF Account, can not be reduced. Regards Devinder
From India, New Delhi
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From India, New Delhi
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Dear All, I agree with Mr Indrajeeth statement , once u fix the pf contribution amount it will not reduce and if any new joinees you can apply this ceiling 6500/- rule. Regrds, Shivananda VD
From India, Bangalore
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From India, Bangalore
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Dear Rajan,
Once you start deducting the amount for a particular employee in PF, you cannot reduce it. However, you can apply this deduction for new joiners by considering the basic salary as Rs. 6500/- and deducting Rs. 780/- as PF, even if their basic salary is above Rs. 6500/-.
Thanks,
Hetal
From India, Mumbai
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Once you start deducting the amount for a particular employee in PF, you cannot reduce it. However, you can apply this deduction for new joiners by considering the basic salary as Rs. 6500/- and deducting Rs. 780/- as PF, even if their basic salary is above Rs. 6500/-.
Thanks,
Hetal
From India, Mumbai
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yea why not. But for old employee pf reduction u should visit epfo website or ask epfo. As I know if we required permission for higher pf contribution then for less contribution till 780 also we can
From India, Faridabad
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From India, Faridabad
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There are two different issues. One pertains to the Provident Fund. The other pertains to the Change of conditions of employment.
Issue 1:
It is legally possible to reduce PF contribution by getting letters of acceptance from employees. As long as the members agree to the changed terms, PF Authorities will not raise any objection. I am actually implementing this for an organization now.
Issue 2:
Changing terms and conditions unilaterally is not possible. Workmen are covered under the Industrial Disputes Act of 1947. Management needs to give Notice for Change. After arriving at an agreement, the Management can change the deduction pattern. With other employees, even though there is no legislation like the Industrial Disputes Act, the Indian Contract Act will be applicable. Hence, any change in terms must be specified, and the Management must get a signature from the employees agreeing to the changed terms.
From India, Chennai
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Issue 1:
It is legally possible to reduce PF contribution by getting letters of acceptance from employees. As long as the members agree to the changed terms, PF Authorities will not raise any objection. I am actually implementing this for an organization now.
Issue 2:
Changing terms and conditions unilaterally is not possible. Workmen are covered under the Industrial Disputes Act of 1947. Management needs to give Notice for Change. After arriving at an agreement, the Management can change the deduction pattern. With other employees, even though there is no legislation like the Industrial Disputes Act, the Indian Contract Act will be applicable. Hence, any change in terms must be specified, and the Management must get a signature from the employees agreeing to the changed terms.
From India, Chennai
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Dear Rajan,
I've gone through all the advice above and do not agree with any of the advice other than what Sivasankaran has suggested; however, even with that, I only partially agree.
It is very much possible to change the PF contribution, as I have done so for many of my clients, and the PF department has always agreed with us.
Contributing to PF more than the statutory limit is at the option of the employer because it is an additional cost for the company, and the company has the option to bear it or not. It is not an obligation for the employer to contribute more than what is legally required. At present, it is Rs. 780 + EDLI and Admin charges on Rs. 6500/-
You simply need to get it approved in your board meeting by your Board of Directors. That's it, nothing else; and you can start deducting PF on Rs. 6500 with immediate effect.
One more important thing I want to mention is whether you can deduct PF on 6500 for new employees and keep the basic as it is for old employees. The answer is NO. You cannot have discrimination among the employees as it goes against the principles of natural justice, though it is not legally wrong.
Regards,
Kapil
From India, Delhi
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I've gone through all the advice above and do not agree with any of the advice other than what Sivasankaran has suggested; however, even with that, I only partially agree.
It is very much possible to change the PF contribution, as I have done so for many of my clients, and the PF department has always agreed with us.
Contributing to PF more than the statutory limit is at the option of the employer because it is an additional cost for the company, and the company has the option to bear it or not. It is not an obligation for the employer to contribute more than what is legally required. At present, it is Rs. 780 + EDLI and Admin charges on Rs. 6500/-
You simply need to get it approved in your board meeting by your Board of Directors. That's it, nothing else; and you can start deducting PF on Rs. 6500 with immediate effect.
One more important thing I want to mention is whether you can deduct PF on 6500 for new employees and keep the basic as it is for old employees. The answer is NO. You cannot have discrimination among the employees as it goes against the principles of natural justice, though it is not legally wrong.
Regards,
Kapil
From India, Delhi
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