Parthw Started The Discussion:

I've got an offer letter that states that Employers contribution to PF will be Rs 780/- per month out of the CTC. Though basic salary is shown as Rs 25,000/- p.m. however the employer states that he has the right to base his contribution on a basic of Rs 6500/-. Is he right? In that case, can I too limit my contribution as calcutated on Rs 6500/- basic per month, or I'm supposed to calculate PF on the full Rs 15000/- basic? Will my contribution be deducted by the company directly from my salary, or I have to separately pay my contribution?
Dear Parth,

According to PF Act, the maximum ceiling of amount to covered under the Act is rupees 6500/- basic per month. Even after anybody wants to be a member then normally his PF amount get deducted on the 6500/- per month only..
But sometimes with the approval of Company members it may be on actual too... And regarding the contribution Company deduct your contribution from your salary and their contribution from their part.. and they make deposit that with PF department.

Hope it must have cleared your queries..


Amit Seth.
Addressing your querry. The maximum PF deduction is 12% and is only on the basic salary and bifurcating this further your basic salary cannot exceed 40% of the CTC and now your Deduction is 780 which is 12% of your basic. The company has right to deduct your PF and in fact the PF is deducted twice from the total CTC.. i.e Employer & Employees contribution.

Nirzari Shah
Hi All,

If the basic sal is 10K or more the employee is not eligible for PF Contribution.However it depends on the company if in this case are intrested in PF Contribution.Correct me if I am wrong.


Hi Arya:

I would like to correct you. If you salary is = to 3000 or less than 3000 than your Pf is not deducted. PF is a contribution by both parties but than if your salay is 10k or less than u r liable for ESI deductions too.. that added in your salary stack.

Nirzari Shah
Dear Amit ,

So PF deduction on 6500/- is mandatory and if the basic is more than 6500/-company have the option to restricted the PF deduction to only 780/-

That,s nice.

Can u kindly help with more details on this e.g ( what’s the process to have the PF limit deducted to 780 at all level .


Dear Arya,

All employees who are earning wages/salary (including Basic+D.A.+Retaining Allowance, if any) upto Rs. 6500/- per month are covered under E.P.F. Act. In this it is mandatory to deduct PF contribution from the wages/salary of employee.

In other case i.e. employees who are earning more than Rs. 6500/- P.M. then it depends upon the company policy whether to deduct P.F. or not. OR deduct only upto Rs. 6500/- i.e. max limit Rs. 780/-.

Dear All,

Thanks for the nice information. It it clear that the employer can choose to limit the PF contribution at the 12% on the basic of Rs. 6500/- i.e. Rs. 780/-.

Can an employee choose to not participate in PF and do not have any deduction or cap it at 780/- for his contribution?

Please clarify. Appreciate your time and help.

Hi everybody,

Thanks for the prompt replies to my query.

I now understand that the employer may restrict his contribution to Rs. 780/- per month (He pays this out of my CTC amount). But I still don't know if I too can restrict my contribution to Rs. 780/- p.m. or I will have to pay according to my actual basic salary. Do clarify this for me.

Finally, does it really make any sense joining the PF at Rs. 780/- p.m. as this may not be worth much after 15-25 years even after earning interest considering inflation. Wouldn't it be better to make one's own arrangements towards pensions/retirement thorugh other investment routes rather than depending upon the government? Let me have your views.

Best wishes to all.

Hi In case of basic more than Rs.6500/-, the employee has a choice for not availing the PF facility depending upon the company policy. Regards...Darshana

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