Rajat Joshi
Hr Consulting ,trainer -creative Thinking
Business Analyst
Engineering Recruitment
Human Resource
Hr Executive
Rati Gupta
Hr Professional

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Hello, Is PF a non-mandatory thing? Can some companies opt not to pay PF? Is there some other alternative to PF? — — - sree
What I know about PF I would let you know.
1 It is non mandatory upto the strength of 19 employees. As the company hires the 20th employee- its mandatory as per the gov rules
2 Now if the employees do not want to have that then it's their prerogative and in that case the employer should take the consent of the employees and records must be preserved as a proof
3 It works with 12 % employees share and 12 % employers share but specially in IT where they talk of CTC entire 24 %is borne by the employee.
4 Once started with PF the employee cannot stop this in between unless he leave sthe job.
As afr as my knowledge goes...

Very good topic, would appreciate if somebody could throw some light on this, to the benfit of all of us.
These days, employees do not like to opt for it, as it reduces their take home plus the administration problem encountered in PF, dealing from withdrawl to transfer.
Best Regards'

Hi All,
Would like to suggest www.lexsite.com for legal queries. U can register for free and view online the related laws of India.

hi everybody
preet is absolutely right. PF is applicable in any organisation, having 20 or more persons employed. PF is deducted @ 12% of basic pay of an employee and the same proportion is deposited by the respective employer as well. so, an employee is forcefully saving 24% of his/ her basic per month.
regarding withdrawl of pf, you have to withdraw the forms from any PF office and fill these up and send to the respective employers. the employee & employers' contribution columns will left blank. the same will be filled up by the employers and signed by their authorised signatory and deposited to the respective PF office. Well, in the said forms, there is one column, asking the mode of payment. it would be preferable if you choose the option of transferring your pf amount directly to your bank account. the transaction is safe and fast.

But as observed, there are many companies, to name a few big brands, specially in IT....which are not providing PF to their employees, rest everything is therein salary breakup.
How can a company claim exemption from PF?
also, when we say CTC, is PF deducted from that only, as it comes under the preview of Cost to the company.
Best Regards'

Companies that have a scheme better than the PF can apply for exemption. Also employees paid more than Rs.6500 per month can also be exempted.
I would appreciate if any body could throw light on whether a person should go for PF or not. Regards, Ratii Gupta
Hi Ratii,

I see you have just joined and have become active as well!! A grand welcome to you..n hope this forum proves to be a learning one as it has been for all of us..

Would like to thank Mariya, Atrita, Anudeep , Preet ..for adding points to this thread of discussion.

This question was also posed by the potential employee and here is how i justified the same:-

1. Applicability of PF :


The Employees' Provident Fund and Miscellaneous Provisions Act 1952 applies to the whole India except Jammu & Kashmir.

Employees' Provident Fund and Miscellaneous Provisions Act 1952 is applicable to:

Every establishment which is engaged in any one or more of the industries specified in Schedule I of the Act or any activity notified by Central Government in the Official Gazette. (List of Industries/Establishments)

Employing 20 or more persons .

Cinema Theatres employing 5 or more persons.

2. The Act does not apply to:

The co-operative societies employing less than 50 persons and working without the aid of power. 16(1)(a)

The establishment to which this Act applies shall continue to be governed by this Act , even if the number of employees falls below 20 at a later date. [ 1(5)].

So one likes it or not we all bound by it and by default if the company has more than 20 employees then PF is applicable.

2. Forced savings - someone had mentioned this..yes one gets the 24% of the Basic & DA credited to one PF account which otherwise would get spent by the employee if it were to fall in his hands.

3. Tax savings : - The employee's contribution adds to the tax shield of One lac limit under section 80 CC . Here it provides 30-40% on the average to the limit to save hard money being taxed.

4. Rate of interests : One gets interest of 8.5 % on the above amount and every year one gets the PF slip entailing the details & balance.

Keeping above factors it is advisable for one to opt for PF contribution.

Yes, if one quits the job and after three months he/she has the option of withdrawing the PF contribution to their respective bank accounts.



Ya ,
I fully agree with Rajat Sir,
In our oragnisation, we too faced same issue,
but we convinced employees,
As the basic intention of all labour laws it is in benefit of the employees helps to create a social security for long term,
but people in BPO who are just jumping jobs don't take it as positive,
they dont look back to stay in particular company for long back,
so we have to convince them , that this is for their benefit,
or we can have a structure in which the Basic + DA will be more than 7500 so this will not come under perview,
& we can take voluntary consent of employees & not implement it.
But still it is better if we abide by law and implement the rules,

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