Understanding Provident Fund: How Does It Apply to Different Salary Scenarios?

Subject: PF Matter

Hi Mr. Shah,

I am writing to address your queries regarding Provident Fund (PF) applicability:

1) What is the maximum limit of PF if the basic salary is Rs 6600/- per month? Is PF applicable in this case?

2) If workers request not to have PF deducted from their wages, is the PF office allowed to grant this to the company? What is the procedure for employers if workers are not willing to contribute to PF?

3) If workers are paid wages based on a piece rate system where rates vary from time to time depending on the number of pieces produced, is PF applicable in such scenarios?

Please feel free to reach out with further questions or clarifications. You can contact me at [mrshah65@gmail.com](mailto:mrshah65@gmail.com).

Regards,
Mr. Shah

The maximum limit for PF is Rs. 6500/- per month. If the basic salary is more than Rs. 6500/- per month at the time of joining, PF is not applicable. PF deduction is mandatory if the act applies; there is no clause in the PF act for not deducting PF from the salary on the worker's request. The PF act applies even if workers are earning on a piece-rate basis.

Regards,
Tushar Joshi

Maximum limit of PF is Rs. 6500/- per month. At the time of joining, if Basic + DA exceeds the limit of Rs. 6500/-, then PF is not applicable. However, if at the time of joining Basic + DA is below the limit, then PF is deducted. In cases where Basic + DA increases due to appraisals or increments, PF is also deducted from the employee.

Hi Dear Shah,

Q: Maximum limit for PF is 6500/- per month. If the basic is more than 6500/- per month at the time of joining, PF is not applicable. PF deduction is mandatory if the act applies; there is no such clause in the PF act for not deducting PF from the salary upon the worker's request.

Ans: Yes, EPF is not applicable in one condition if the members were not EPF members in the previous establishment/company (you can use Form No. 11 for not deducting EPF). Yes, EPF deduction is mandatory if the act is applicable.

Q: Does the EPF act apply even if workers are earning on a piece-rate basis?

Ans: Yes, the EPF act is applicable to piece-rate workers.

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Hello, Sir! I would like to apply for the PF online and acquire PF amount from the previous two organizations I have worked with. I live in Bangalore. Can you please guide me through?

Dear,

1. The maximum limit for PF is Rs. 6,500/- (even the management has the right to pay an amount exceeding this based on actual salary).
2. If the organization's strength is more than 20, it is mandatory to enroll in PF and make contributions. Workers do not have the right to withdraw from the scheme.
3. Even for piece-rate workers, enrollment in the scheme and payment of PF contributions are required.

Regards,
R. Palaniswamy

Dear Members,

I have a few questions on PF:

1. Some companies limit basic to Rs 6,500 and contribute 12% (Rs 780) to it as PF. Is this method acceptable?

2. If PF is not mandatory for employees drawing more than Rs 6,500 as basic, why do most companies pay PF even if their employees draw much more than Rs 6,500?

3. Is it true that once a company is registered under EPF before its employees were below the Rs 6,500 mark, the company will have to continue covering its employees under EPF even after the employees cross the Rs 6,500 mark and continue covering the new employees even if their basic is above Rs 6,500?

Thank you in advance for your response.

Regards,
Prasanna

Hello!

If Basic is less than 6500 Rs per month, but Basic + DA is more than 6500 Rs per month, does the EPF Act apply in such a case?

Hello all,

As you have mentioned in reply to the question, PF is applicable to the employee who joined our organization with a basic salary equal to or less than 6500 RS. My question is for those who are already existing in the PF range but due to promotion and increment, their basic salary exceeds 6500. What action can we take as HR?

- Can the employee withdraw from their PF deduction after exceeding the limit of 6500 RS?
- If yes, then what is the procedure for the same? Which form and application need to be filled?

Thank you.

Dear all,

The limit of PF is (6500) BASIC+DA. PF Act is applicable where a minimum of 20 workers are working or were working on any day of the preceding twelve months. If the Act is applicable one time, it will be applicable forever, whether the number of employees is less than 20.

The employer would be responsible for deducting PF for those whose wages are less than 6500 or 6500. Of course, the employee does not have to deduct PF. Employers have a voluntary option for employees whose wage is more than 6500.

Note: If an employee was a member of PF in their last company, then the employer shall deduct PF (6500) of the employee in the same case.

Dear seniors, please advise me if I am wrong.

Regards, Arun Gahelot G.P. ADAMPUR 09654299247

Yes, I agree with Tushar Joshi. If anyone falls within the limits of EPF, i.e., ₹6,500, he/she will be covered under EPF. There is no such clause for not deducting EPF premium.

Dear ISHAN POPAT ji,

Yes, the EPF Act is applicable, but it depends on the employee's agreement to deduct. If the employee agrees, then EPF will be deducted on 6500 only, even if the basic salary + DA is more than 6500.

Dear all members,

The PF Act states the following:

1. The basic limit for PF is Rs. 6500.
2. At the time of fresh joining of the establishment, PF is mandatory up to a basic of Rs. 6500. However, if the employee was not a previous member of PF and provides a declaration in Form No. 11, then it is not a mandatory condition. Both the establishment and the employee must agree to contribute either up to Rs. 6500 or more than Rs. 6500.
3. The Act also specifies that PF is mandatory for piece-rated employees.

For any PF-related queries, please email me.

Rajesh Khattar
Muskan Consultancy Services
Delhi, India
PF & ESIC Consultants
Email: mcs.rajeshkhattar@gmail.com

Hi Prasanna,

Here are the answers to your questions:

1. Some companies limit basic to Rs. 6,500 and contribute 12% (Rs. 780) to it as PF. Is this method acceptable?

Ans: Yes. This method is applicable, and even if the company is trying to deduct your PF on the whole of your basic, you as an employee have the option of giving direction to the employer to restrict your deduction to only Rs. 780/- (i.e. up to 6,500/-). This would help you to have more cash in hand. You may choose to pay more as a voluntary contribution, as and when you feel that you have excess cash in hand.

2. If PF is not mandatory for employees drawing more than Rs. 6,500 as basic, why do most companies pay PF even if their employees draw much more than Rs. 6,500?

Well, many companies are living in bliss thinking that this is a noble saving, and that would help employees retiring from work to have a good amount in hand. But many don't understand that withdrawal of the amount from PF dept. is not very smooth, and also they don't actually pay your 8.5% of the amount promised, with their own weird calculations. You could earn much more outside nowadays with the same amount, and you can be your own boss of the money invested.

Secondly, it becomes an administrative issue for a company to avoid covering one or two out of PF coverage. But in fact, every employee has the right to decide whether to join the fund or opt out of it at the time of joining if his/her basic wages are more than Rs. 6,500/-. A mere declaration in Form 11 stating that he/she has ceased to be a member of PF by making an application for withdrawal, along with a declaration stating that he/she does not intend to continue as a member of PF, the company MUST HONOR, as it is the employee's hard-earned money.

3. Is it true that once a company is registered under EPF before its employees were below the Rs. 6,500 mark, the company will have to continue covering its employees under EPF even after the employees cross the Rs. 6,500 mark and continue covering the new employees even if their basic is above Rs. 6,500/-?

Yes, it is true that you have to continue to cover the employee even after crossing the Rs. 6,500/- limit. However, you have an option of directing the employer to restrict the deduction only up to Rs. 6,500/-.

You may choose to opt out only when you join another company.

K. Ramesh

Hi Mpartheepan,

You can close your PF account only if you have left your organization and can withdraw the amount by submitting an application in Form 19 & 10C to the PF department.

You have to wait for a 60-day waiting period after leaving the organization before making an application to the PF department, as they won't entertain any applications for the first 60 days from your leaving date.

Your Form 19 & 10C must be duly attested by the authorized signatory of the company you are leaving, and it must be attached with a Form 3A (for the current contribution period). Make sure to include one blank canceled check with the documents to help the department identify your actual bank account.

K. Ramesh

Hi Abinavhr,

Once an employee is covered under EPF, whether his/her basic is less than or more than 6500/-, he/she must continue under EPF until leaving the organization, and there is no other option about it.

It is possible for the company to allow such an employee to exit the PF if he/she is deputed on assignment for a shorter period outside India. They can officially exit the employee, and upon his/her joining back, can submit Form 11 along with a self-declaration for exemption from PF. Other than that, no other possibility is available.

With Best Regards,
K. Ramesh

The maximum limit of PF is Rs. 6500 per month. It is mandatory if the act is applicable in such organization because some organizations are exempted due to different reasons. Therefore, if once salary is under the aforesaid limit, PF will be deducted from both sides. However, to receive employer contributions at the time of withdrawal, at least a period of six months should be completed.

Regards, Subhash Sharma
Mgr. (P&A) 🌟

1) If an employee has his or her basic salary as 6500 or less, then he/she is eligible for PF.

2) An organization having at least 20 employees or one that comes under the EPF industrial unit definition has to enroll itself for PF.

3) But what if an employee's basic salary is more than 6500 or they got an increment and now have a basic salary exceeding 6500? In this case, if the employee is already registered with PF, then whether they switch from one organization to another or get an increment, PF will still be deducted.

4) If an employee, who was receiving PF in their earlier organization but now does not want to have it deducted, they can fill a form, which is Form 11.

5) When can you claim your PF? If and only if you work for a minimum of six months with the same organization, you can claim your PF after one month from the date of your acceptance of resignation.

Regards,
Sapna