Confused About PF Deductions? Understanding Why It's Missing from Salaries

Dear Senior,

I have a little confusion about PF deduction from employees because in our organization, one of the employees' basic pay is 9600 but PF has not been deducted from his salary.

1. Please clarify why PF has not been deducted from his salary?
2. I heard somewhere that if an employee's salary exceeds 6400, then PF will not be deducted. Is this correct?
3. However, in the second question, I am a bit confused whether 6400 refers to the basic pay or the PF amount. Kindly clarify.

Regards,
VIDYA

Dear Member,

The wage ceiling fixed under this Act is Rs. 6500/- as basic wages. If the basic wages exceed the limit at the time of entry, the provisions of the Act do not apply, and the employees are exempted from being subscribers of this fund. However, if any employee draws a salary or wages greater than Rs. 6500/- as basic and opts for the EPF scheme, and the employer also accepts such offer and agrees to extend the benefit, then all employees drawing more than the fixed (Rs. 6500/-) basic wage will be covered under this scheme; otherwise, it is not mandatory. In some organizations, all employees are covered under the EPF scheme, and the contribution for this scheme from the employee as well as the employer is restricted up to Rs. 6500/- as basic wages.

The deduction of PF is on the salary of up to $6,500. However, if the employee has a salary greater than this limit, then the calculation is based on the same limit. The employer's contribution is 8.33% or a maximum of $541 towards the pension fund and 3.67% towards the provident fund. The deduction of PF is based on the basic salary of the employee.

Dear Friends,

According to the PF Act, the salary ceiling for entitlement to PF deduction is Rs. 6,500 Basic per month. However, it is observed that PF is deducted even for those employees whose basic salary exceeds Rs. 6,500 per month.

Regards,
Vidya