Is PF Deduction Mandatory, or Can I Opt for a Full Salary Payout Instead?

Can anybody please guide me on the issue of whether PF deduction is compulsory? In case I do not want PF to be deducted from my salary and instead paid out along with the monthly salary, is there any government rule that prevents the company from doing so?

Thank you for your assistance.

If your Basic + D.A. is more than 6500 per month, then you can avoid PF deduction. But what I would suggest is PF is a good thing; it secures your future. If you decline your right of PF, then the employer's contribution of 12% will go out of your hand.

There are 2 contributions: 1. employer, 2. employee. If you say no to PF deduction, you will be losing on employer contribution as well.

You have to contribute PF if your salary is under Rs. 6500/- per month. If it exceeds Rs. 6500, you can choose to exclude yourself by submitting a written request to the company.

Dear Prashant,

There are certain rules and guidelines given under the Employee Provident Fund and Miscellaneous Act of 1952. It states that if your company is registered under PF, then everybody has to be compulsorily under PF coverage. There are two choices with the company: either to go with a basic of 6500/- or the actual basic for PF deduction, depending on the company policy. If you opt for the first choice, there is no need to deduct PF for a basic above 6500/-. You cannot simply ask the employer not to deduct PF; however, you can go for voluntary contribution if your employer accepts it.

With regards,
snjv

Hi Meghli, P. Ramachandran & Snjv,

Many thanks for answering the query and enlightening me on the topic. I have one more doubt: if the employer agrees not to deduct the PF (considering basic + DA = 16000/- pm), will the employer also payout its 12% contribution as part of the monthly salary?

Dear Prashanth,

You would have made an agreement at the time of your joining that your CTC (cost to company) should include the PF contribution if the company is paying PF contributions to others. Otherwise, you can also contribute to PF (from the date of joining) on the ceiling amount of Rs. 6500/- every month, and you will get a company contribution of Rs. 780 every month as well.

Wishing you a Happy Deepavali!