Dear Seniors, We just learned about VPF (volunteer provident fund), which we were aware of earlier. Due to this, our company is paying the employer share of Rs.1800 (550 in pf & 1250 in pension) of the maximum wage limit of 15000, but we are deducting 12% of employees' actual basic pay, which is perhaps wrong, but we were not aware of it.
Kindly reply the following queries:
Can we correct this mistake by considering this higher contribution of employees in VPF? If yes, then what process do we need to follow, and is it mandatory to get permission for it from the EPF department?
And, if our new employee's actual basic wage is more than 15000 and he is not interested in EPF deduction on his actual basic salary, then can we and the employee both contribute (1800*2=3600) up to the maximum salary limit of 15000? If yes, then how will we show it in ECR?
I look forward to your prompt reply
Thank You
Gajinder Singh
From India, Patiala
1Kindly reply the following queries:
Can we correct this mistake by considering this higher contribution of employees in VPF? If yes, then what process do we need to follow, and is it mandatory to get permission for it from the EPF department?
And, if our new employee's actual basic wage is more than 15000 and he is not interested in EPF deduction on his actual basic salary, then can we and the employee both contribute (1800*2=3600) up to the maximum salary limit of 15000? If yes, then how will we show it in ECR?
I look forward to your prompt reply
Thank You
Gajinder Singh
From India, Patiala
Your query is not clear. I interpret it as:
1. You have been paying PF on actual basic and DA which may be higher than Rs 15000.
2. Now you want to bring it down to 12% of 15000.
If that is your first query, then I would say that you can do it. There are a few things.
1. Did you contribute your (employer) share on actual Basic and DA which is above Rs 15000?
2. If so, by restricting your contribution to 12% of Rs 15000, the Cost to Company will also come down. How are you going to compensate it?
If you are paying the difference under any head of salary then there is no issue. For EPFO, it is not an area of concern. In Maratwada Gramin Bank, a case where the bank which was contributing on salary above the threshold limit decided to limit it to statutory limit (it was Rs 6500 then but you can take it as Rs 15000 now) the EPFO had challenged it saying that the employer cannot reduce the PF contributing salary. But the Apex Court held that the EPFO has no right to demand a contribution on an amount higher than Rs 15000 (then Rs 6500) Therefore, you can start paying contribution on Rs 15000, the same will be reflected in your ECR and that is enough. No need to send any separate communication.
Coming to your second part of question, I would say that if all the employees contribute on actual basic and DA and only a few, like the one who is joining, do not want it on actual but to be done on Rs 15000, then you can restrict his contribution on Rs 15000. To be of safer side, you can get a declaration from that employee(s) undertaking that they want to contribute only on Rs 15000 or whatever is the statutory ceiling as per EPF and MP Act. This is just to make sure that tomorrow when higher amount of TDS is made from his salary, he should not come and raise it as a dispute.
In the ECR, against EPF salary (also under EPS and EDLI) you can show Rs 15000 against such employees. The same against other employees who contribute on higher/ actual basic and DA, the EPF salary will be that higher amount.
From India, Kannur
1. You have been paying PF on actual basic and DA which may be higher than Rs 15000.
2. Now you want to bring it down to 12% of 15000.
If that is your first query, then I would say that you can do it. There are a few things.
1. Did you contribute your (employer) share on actual Basic and DA which is above Rs 15000?
2. If so, by restricting your contribution to 12% of Rs 15000, the Cost to Company will also come down. How are you going to compensate it?
If you are paying the difference under any head of salary then there is no issue. For EPFO, it is not an area of concern. In Maratwada Gramin Bank, a case where the bank which was contributing on salary above the threshold limit decided to limit it to statutory limit (it was Rs 6500 then but you can take it as Rs 15000 now) the EPFO had challenged it saying that the employer cannot reduce the PF contributing salary. But the Apex Court held that the EPFO has no right to demand a contribution on an amount higher than Rs 15000 (then Rs 6500) Therefore, you can start paying contribution on Rs 15000, the same will be reflected in your ECR and that is enough. No need to send any separate communication.
Coming to your second part of question, I would say that if all the employees contribute on actual basic and DA and only a few, like the one who is joining, do not want it on actual but to be done on Rs 15000, then you can restrict his contribution on Rs 15000. To be of safer side, you can get a declaration from that employee(s) undertaking that they want to contribute only on Rs 15000 or whatever is the statutory ceiling as per EPF and MP Act. This is just to make sure that tomorrow when higher amount of TDS is made from his salary, he should not come and raise it as a dispute.
In the ECR, against EPF salary (also under EPS and EDLI) you can show Rs 15000 against such employees. The same against other employees who contribute on higher/ actual basic and DA, the EPF salary will be that higher amount.
From India, Kannur
Dear Senior,
Thanks you for your prompt reply and i want to explain my query once again with following example:
1. If any employee’s actual basic salary is Rs. 21600 and company is deducting his epf Rs. 2592 (12%) and paying its share up to the maximum basic salary limit of Rs.15000 which is Rs 1800 (550 in pf & 1250 in pension) is it correct ? and if it is correct then can we termed this sort of epf deduction as VPF (volunteer provident fund) if yes, do we need to take any permission in written of EPF department for it ?
2. If this employee wants to pay his epf share Rs. 1800 instead of Rs. 2592 (12% of his actual basic salary) can we do this ? if yes, then when can we start this and which basic salary will we have to show in column of EPF WAGES in ECR file Rs. 21600 or Rs. 15000 ?
Thank You
Gajinder Singh
From India, Patiala
Thanks you for your prompt reply and i want to explain my query once again with following example:
1. If any employee’s actual basic salary is Rs. 21600 and company is deducting his epf Rs. 2592 (12%) and paying its share up to the maximum basic salary limit of Rs.15000 which is Rs 1800 (550 in pf & 1250 in pension) is it correct ? and if it is correct then can we termed this sort of epf deduction as VPF (volunteer provident fund) if yes, do we need to take any permission in written of EPF department for it ?
2. If this employee wants to pay his epf share Rs. 1800 instead of Rs. 2592 (12% of his actual basic salary) can we do this ? if yes, then when can we start this and which basic salary will we have to show in column of EPF WAGES in ECR file Rs. 21600 or Rs. 15000 ?
Thank You
Gajinder Singh
From India, Patiala
Paying higher contribution per se is not voluntary contribution but when an employee pays PF at a rate higher than 12% is voluntary contribution. But since there is a statutory ceiling of Rs 15000, any contribution above Rs 1800 is also called voluntary contribution. There is no intimation to be given to EPFO either to contribute on higher salary or contribute higher percentage on any salary. Similarly, in order to go back to the old system of contributing on statutory limit, no communication is required. But for your evidence, you should get a declaration from the employees who wish to contribute on higher salary or higher rate or withdrawing the same, as the case may be.
From India, Kannur
From India, Kannur
Dear Sir,
Thanks you for your reply and sir i have one more following query in this regard:
That If employee wants to reduce his EPF contribution from 12% of his actual basic salary to Rs. 1800 then can we do this on his request ? if yes, then when can we start this and we have to show which of his basic salary, actual basic salary or Rs.15000 (Maximum Pay Limit) in EPF WAGES column in ECR file ?
Thank You
Gajinder Singh
From India, Patiala
Thanks you for your reply and sir i have one more following query in this regard:
That If employee wants to reduce his EPF contribution from 12% of his actual basic salary to Rs. 1800 then can we do this on his request ? if yes, then when can we start this and we have to show which of his basic salary, actual basic salary or Rs.15000 (Maximum Pay Limit) in EPF WAGES column in ECR file ?
Thank You
Gajinder Singh
From India, Patiala
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