As per Provident Fund (PF) regulations, PF is payable at 12% (for both the employer and employee contributions) against ‘basic wages’.As we know basic wages of many workers are higher than statustory Limit of 6500/- prescribed under Provident fund regulations.
Now the question arises here is whether employer can restrict Provident fund amount maximum to 6500 where basic wages is more than 6500/-. ?
Second point is here that ,if a employer has deposited PF @ 12 % on more than Rs 6500/- then whether employer can discontinue this process any time in future ? In past many case PF department is raising demands in such cases from employer and asking them that you can not pay less than 12 % of the Basic wages.
Recently Hon'able Supreme court has decided ,In the case Marathwada Gramin Bank Karamchari & others,: Where the employer makes contributions towards the PF on pay in excess of the statutory ceiling limit, these may be discontinued at any time.
The SC had also held that an employer cannot be compelled to contribute on pay in excess of the statutory ceiling limit under the PF Law. The provisions of the PF law, which does not allow the employer to reduce an employee's PF benefits will only operate as a bar when there is an agreement with the employee to make contributions on full monthly pay.
After the decision EPFO has reviewed his stand and clarified the issue as under.
The circular issued by the EPFO states that: The PF office will not challenge this order of the Supreme Court. EPFO has directed its offices to not force employers to contribution towards the PF on pay over and above the statutory wage ceiling limit. An option is available for employers and employees to contribute on salary beyond the statutory salary ceiling if they so desire, subject to approval from the PF office.
This is very welcome clarification from EPFO department . Kindly give your reaction on the issue