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If you deduct PF on 6500 from the beginning, it is valid in case the Basic is higher than 6500. However, if you are deducting on a higher basic earlier or until now, and if you wish to reduce it, it's not permissible by the Act. Please refer to the section where wages cannot be reduced.
From India, Pune
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It is though not advisable to reduce PF contribution as seen in the case of Rajan, but one can do so by an application to the EPF office though your employer.
From India, Moradabad
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Dear Mr.Rajan, You can start deductions on ceiling limit of PF Wage i.e.Basic+DA at Rs.6,500/- for new employees but cannot change in the middle as per EPF&Misc Act 1952
From India, Hyderabad
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By reducing the employer's contribution to 12% of 6500 from that of higher wages, the employer is not reducing wages, attracting section 12 of the EPF Act. The employer can limit their contribution to 6500 only. Please see the Supreme Court decision in 2011 in the case of Marathwada Gramin Bank.

However, Section 9A of the ID Act shall be complied with.

Varghese Mathew

From India, Thiruvananthapuram
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Yes, it is possible, but it's only possible during the time between management and union wage agreement.

1) Accepted by both parties and signed by both.
2) Once the agreement is signed, there will be no increase in the wage amount. The previous amount will continue without any increment. For example, if the previous amount was Rs 900/- per month, the present amount will also remain at Rs 900/- without any increase. (This amount is above the PF norm of 6500/-).

From India, Hyderabad
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I fully agree with Mr. Sankaran. Here, this is applicable to manufacturing industries. In the email posted by the advice seeker, it is not mentioned whether he is in the service sector industry of manufacturing. Also, if all employees agree to the change with the condition that CTC should not be impacted by reducing PF contribution on Rs. 6500/-, the employer ultimately reduces financial liabilities. In such a scenario, the employee can ask for an increase in salary in proportion to the difference of the amount reduced by the employer due to the decision of the deduction of PF on Rs. 6500/-. For example, if the Basic is Rs. 10,000/-, the employer's share of contribution will be Rs. 1200/-, instead, due to Rs. 6500/-, it will be Rs. 780/-, hence Rs. 420 must be added per month in some salary head.

Benefits - Net take-home salary will be increased.

Disadvantage - Retirement savings will be reduced, and Tax deductions will be high.

Regards,
Vipul Rana


From India, Thana
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Dear Friends,

Out of the above postings, Mr. Kapil is absolutely right. Contribution beyond the ceiling limit is the option of the employer. Statutory obligation is only on actual salary up to the ceiling limit. Whether previously contributed beyond the ceiling limit or not is not a matter.

I know of one case regarding the Milk Marketing Federation Ltd under the Co-operative sector in Kerala. Earlier, they had contributed on actual salary beyond the ceiling. However, an audit objection was raised as the statutory obligation is only on the ceiling limit. Subsequently, they changed to restrict the contribution to the ceiling limit. They didn't find any practical difficulty in reducing the contribution.

Abbas.P.S

From India, Bangalore
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Mr. Ranjan,

I fully agree with Mr. Shankaran; however, you can implement the suggested changes for a new employee whose basic pay is more than 6500/- and the employer contribution amount of 885/- includes administrative charges, i.e., 780 + 1.61%.

Thanks.

Deepak M.

From India, Thana
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Dear All
There is a judgement pronounced recently by Gujarat High court that says : • Employer’s share to EPF contribution can be reduced to Rs.6,500. Gujarat . High Court , # 806.
complete details on the same are awaited but guess this will but and end to the ambiguity on whether EPF contributions can be reduced back to the statutory ceiling requirement of INR 6500/- as provisioned in EPF even thou earlier contributions were higher then 6500/-
Best regards
Vaibhava Mahamunkar

From India, Mumbai
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Why do you go by High Court decision when there is a Supreme Court decision? HC decisions on Labour are binding on that state only .But SC decisions are binding on all states. Varghese Mathew
From India, Thiruvananthapuram
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