New pf calculation for salaried person

Sonu Iyer, partner, Ernst and Young, points out a possible shelter that could be available in respect of employees in India. Proviso to paragraph 26A of the PF Scheme allows PF contributions by the employee as well as the employees on a maximum notional level of Rs 6,500 per month, instead of the entire salary (including various allowances). The rate remains the same at 12% each for the employer and employee contributions respectively. "Not many employers have opted for this route, as PF is part of the employees cost to company and it also gives a tax shield to the employees. Now, if the employer organisation suddenly wishes to exercise this option and compute PF contributions only against Rs 6, 500 per month, it is not clear whether the PF authorities will oblige," Iyer explains.