Epf & salary structure

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 February 2012 Good Evening Friends,

I have a query regarding the implication of EPF.

one of my company have around 20 employees and have CTC PM approx 60k per employee.

the company not yet registered under EPF.

As per EPF act the company come under the ambit of EPF.

As per the company management they are not in the position to fulfill all the compliance and liability of EPF..and want to deffer this liability till April 2012.

Please confirm how can i remove the implication.

Can i reduce the basic till 6500 Pm of every employee ?

Querist : Anonymous

Querist : Anonymous (Querist)

11 February 2012 Is there anyone to help on this ?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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21 July 2024 If your company has 20 employees with a CTC (Cost to Company) of approximately 60,000 per employee per month, and you're looking to manage EPF (Employees' Provident Fund) compliance issues, here are some key points to consider:

1. **EPF Applicability and Registration:**
- As per the EPF Act, any organization with 20 or more employees is required to register under EPF.
- Your company falls under this ambit since you have 20 employees.

2. **Basic Salary Consideration:**
- EPF contributions are based on the employee's basic salary plus dearness allowance (DA), if any.
- The minimum basic salary on which EPF contributions are calculated is 15,000 per month.
- If you reduce the basic salary to 6,500 per month for each employee, EPF contributions will only be calculated on this lower amount. However, this is not recommended if it doesn't accurately reflect the true salary structure, as it could lead to compliance issues later.

3. **Deferred Compliance:**
- It's not possible to defer EPF compliance until April 2012 or any other date. The EPF Act mandates compliance as soon as the threshold of 20 employees is met.
- Delaying registration or compliance could lead to penalties and legal issues.

4. **Steps to Address Compliance:**
- Register your company under EPF immediately if you have reached the threshold of 20 employees.
- Calculate EPF contributions based on the actual basic salary structure of your employees.
- Ensure timely deposit of EPF contributions before the due date to avoid penalties.

5. **Impact of Basic Salary Reduction:**
- If you reduce the basic salary to 6,500 per month, EPF contributions will be lower, but this could lead to dissatisfaction among employees as EPF benefits will also be reduced.

### Conclusion:
To address EPF compliance:
- Register your company under EPF immediately if it meets the threshold of 20 employees.
- Calculate EPF contributions based on the actual basic salary structure of your employees.
- Ensure compliance with EPF regulations to avoid penalties and legal repercussions.

Reducing basic salary to the minimum to avoid EPF obligations is not a recommended practice unless it accurately reflects the true salary structure of your employees. It's crucial to comply with EPF regulations to ensure employee welfare and legal compliance.

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