Dear All, Please discuss on deduction of PF percentage on Gross. we all know about 12% for both sides. Bur my query - if the employee agrees then can more than 12% be deducted on gross salary for PF?
From India, Kolkata
From India, Kolkata
First of all, it needs to be understood that PF is not payable on gross salary, but is 12% of Basic Pay, DA and retaining allowance. HRA is specifically excluded from reckoning. If the employee opts so, the deduction of employee's contribution could be enhanced from 12% stated above.
From India, Mumbai
1534From India, Mumbai
While the 12% deduction is a standard deduction on PF, if an employee wishes so, he can contribute towards what is called as Voluntary Provident Fund ie., VPF, however there would be no company contribution for the same and there is no limit for contributing towards his VPF.
From India, Chennai
From India, Chennai
Hi
I have a related question. We doubled the basic + DA salary of a manager in the current FY. His EPF/VPF is being contributed earlier based on 18K. Now, should we double the EPF contribution of this employee? Also, how will it impact our company contribution?
Any insight would be appreciated.
thanks,
I have a related question. We doubled the basic + DA salary of a manager in the current FY. His EPF/VPF is being contributed earlier based on 18K. Now, should we double the EPF contribution of this employee? Also, how will it impact our company contribution?
Any insight would be appreciated.
thanks,
PF can be deducted on gross salary. Actually it should be deducted on gross salary only. the Basic pay as per PF Act means gross salary only. The exclusion part of HRA is that house rent which is borne by the employer for the employee and not the one included in the salary.
Coming to Palahuja, I understand that the situation is like this. You have increased the Basic salary (or simply PF qualifying salary) of your employees. Now the amount that each one will contribute will obviously increase. That will benefit the employees by way of Tax. Now just because you have increased the salary and that the employees are contributing higher amounts to PF, the employer is not liable to contribute on amounts higher than Rs 15000. The employer's contribution can be restricted to 12% of Rs 15000.
One more observation. Suppose the employees' PF qualifying salary has become more than Rs 15000. If the employees think that PF shall be contributed only on a maximum of Rs 15000, the PF qualifying salary shall be kept at Rs 15000. Normally in such cases, the Payroll will be modified and the PF will be deducted on a maximum of Rs 15000.
From India, Kannur
Coming to Palahuja, I understand that the situation is like this. You have increased the Basic salary (or simply PF qualifying salary) of your employees. Now the amount that each one will contribute will obviously increase. That will benefit the employees by way of Tax. Now just because you have increased the salary and that the employees are contributing higher amounts to PF, the employer is not liable to contribute on amounts higher than Rs 15000. The employer's contribution can be restricted to 12% of Rs 15000.
One more observation. Suppose the employees' PF qualifying salary has become more than Rs 15000. If the employees think that PF shall be contributed only on a maximum of Rs 15000, the PF qualifying salary shall be kept at Rs 15000. Normally in such cases, the Payroll will be modified and the PF will be deducted on a maximum of Rs 15000.
From India, Kannur
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