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It is not obligatory or statutory on the
part of the employer to provide for pension
to all employees. It is entirely upto
him to decide to which class/ classes
of employees he desires to extends the
scheme. The eligibility conditions may
be defined on the basis of designation
or salary. (However, after the categories
are specified, employer cannot discriminate
between the employees and thus extends
the scheme uniformly).
The maximum annual contribution that an
employer can make to the Pension Fund
and Provident Fund is restricted by the
Income Tax Provisions to 27% of the annual
salary (basic plus D.A.) The annual contributions
are treated as deductible business expenses.
Mostly the employer contributes, but is
so desired, both the employer and the
employees may contribute, in which case
the scheme is called a Contributory Pension
Fund Scheme.
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