Can 2 Employees Have Same CTC One With PF And One Without PF

Dear All,
Please help me with a query. I have all the employees covered and contributing to PF on complete basic (both employer and employee contribution) irrespective of their basic limit. Now to increase the takehome management have decided to offer people who will join from now on in certain departments whose basic salary is more than 6500 without PF.
My doubt is can I have both the kind of employees. For the same CTC one employee without PF and one employee with PF. But the act says that employee can opt out of PF if his basic is more than 6500. So it is to the consent of both employer and employee. So if any employee wants to opt out than we have to give him structure without PF and if employee wants PF then we have to give structure with PF. Am I right in saying so
Please this is urgent.

Hi
Yes you can give but ensure you have a proper tracking system and all documents during the PF inspections.
But consider not to opt out of PF and there wont be much of a difference in thier take home too and its 200%+ returns for an employee and the best saving scheme in India.

There is nothing wrong in having two salary structure for the employees, one with PF and another without PF. But you should understand the purpose of PF and teat it as an investment rather than looking at the take home salary alone. Also,in the case of a fresher from college it is okay that you can put him under a category without PF but in other cases, most of them who join your company would be having an existing PF. In such cases you will have to give PF even if his PF qualifying salary at the time of his joining your company is more than 6500.

Another important aspect is that suppose you are hiring people without PF and spreading the PF element among other components of salary and making take home sizeable one. And suppose the PF Organisation decides to increase the salary from the present 6500 to Rs 10000 (already the Central Govt has approved it in view of the fact that the minimum wages in various industries across India is more than Rs 6500) then what happens, you have to give coverage to these newly employed persons also. Then, you cannot make any adjustment in the salary but you will have to bear your contribution as an additional cost. Therefore, any decision should be taken after studying thoroughly.

In my opinion, it is always better to follow the present system. For employees contribution to PF is an investment as well as a tax saving benefit. Yes, if your apprehension is all about contributing on complete basic +DA(if any) then you can do one thing, you can reduce/ restrict your contribution to 12% of 6500 (or whatever salary limit the Govt. may fix in future). If the employees are also willing, their contribution shall also be reduced to Rs 780 so that their take home salary would go a little higher also.

Regards,

Madhu.T.K

In my opinion you should follow up present practises, PF is good part of future saving,not only that in case of sudden death of employee.nominee is entitled to get pension benefit & lump sum amount on basis of numbers of years & other components. Also in many industries,CTC concept is followed up.In that case both parts are deducted from employee basic,it does not bear additional cost to employer.
You may skip PF deduction provided basic above Rs 6500/-,but you may not skip it for employees of less salary.
Now a days in most industries,compliance is followed up to get rid off any disturbenses in futur from labour department.
Thanks n Regards,
Sushant

Dear senior,
(1) Our company follows CTC method. Employees , getting basic 15,000+ are given option of joining EPF . Many employees wish to invest somewhere else and don't join EPF. In any case company pay the same amount.
(2) Should company continue with the same practice or make EPF mandatory ?
(3) Can employees and employer limit their contribution limited to 15,000 per month , in case basic above 15,000 ?
(4) Can existing employees presently not a member of EPF and drawing above 15,000 can join EPF now ?
(5) What is in the best interest of employers & employees ?

More points..
(6) We have employees whose total CTC is 16,000 and basic is also 16,000 and not covered by EPF. Can we re-structure the salary with basic 8,000 and cover them with EPF ? Employees have no problem with such restructuring. If necessary employees can request to employer to restructure their salary components.