Provident Fund - whether more than 12% mandatory

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Rashmi (Querist)
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12 August 2010 Hi,

My friend has got a job offer from a MNC ( IT sector) .He will be having a base pay of Rs 10000. But in the offer letter under retirement benefits, his PF contibution is s hown as Rs 780 only. when he called the company to rectify it to 1200 (10000*12%) they said they have kept it a base of Rs 780 & if he wants to contribute more he can do so but it will be under Voluntary contribution only. My questions are as follows :
1. shouldnt the company deduct Rs 1200 as it is 12% mandatory of base pay?
2. in case he decides to contribute Rs 1500 as Voluntary contribution to PF , is it mandatory for the company to contribute a similar amount ?
3. If the company refuses to contribute a higher amount than Rs 780, can he take any corrective action against them.

Please reply at the earlest. Thanks in advance.

CMA. Subhash Kumar Jha

CMA. Subhash Kumar Jha (Expert)
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12 August 2010 1. Mandatory 12 % of basic pay is correct, but the pay limit is Rs. 6500/- so 6500/- X 12% = 780/-. Deduction above this is optional & that can not be enforced.

2. Employers are liable to contribute to PF similar to that of the employee, but again the limit is 780/- only & above this is only optional.

3. No action can be taken as the company is willing to pay the mandatory amount.