Salary Increase and PF Contributions: Can I Stop PF for Employees Earning Over Rs. 6500?

In my company, PF contributions are paid to employees whose basic salary is less than Rs. 6500/-, which is the statutory rule. After the latest appraisal, the basic salary of some employees who fall under PF has increased beyond Rs. 6500/-. Can I discontinue their PF, and what is the process for this when submitting the PF returns?

Employees who, while joining the organization, have a basic salary above Rs 6501/- have the option to either become or avoid becoming a member of the Provident Fund. However, employees whose basic salary upon joining the organization is less than Rs 6501/- but increases above Rs 6501/- after some time must compulsorily continue to be a member of the Provident Fund.

Regards,
Asmita Bhalla
Atmik Consultancy Services
[Phone Number Removed For Privacy Reasons]

I fully agree with Asmita Bhalla that employees whose basic salary, while joining the organization, is less than Rs 6501, but after yearly increments, their basic salary increases above Rs 6501, must compulsorily continue to be members of the Provident Fund. However, do not deduct PF on the full basic salary; deduct only on Rs. 6500. For example, if the increased basic salary is Rs. 7500, you can deduct PF only on Rs. 6500.

Regards,
Akram Inamdar
Sr. Manager-HR

Hi,

In simple terms, once the PF is started, it cannot be stopped unless the employee resigns from the organization and withdraws his PF.

Chandrakant Vishwakarma
9820592842
(Labour Law & IR Consultant)

In that case, deductions will be on $6,500 only, and the rest of the deductions will be transferred to the EPF account.

Employer's Obligation for PF Contributions

Employers need to pay PF contributions up to Rs. 6,500. Any amount paid above this limit is not statutory; however, if an employer chooses to contribute more than Rs. 6,500, it is at their discretion. It is mandatory to pay PF contributions on the amount of Rs. 6,500. No employer can completely avoid contributing to their employees' PF if their basic salary exceeds Rs. 6,500.

Regards,
Srujana

Dear all,

As you are all aware, the minimum wage has been increased. Therefore, should the basic pay now be equal to the minimum wage, or should the total salary be equal to the minimum wage?

As per the PF rules, if employees are non-excluded employees of PF during the time of joining, they can't come under the "excluded employees" category even if their basic salary is higher than the prescribed limit. In this case, even if their basic salary is more than 6500, we have to consider 6500 for PF deduction. The company can select either of the options for the deduction of PF:

1. 6500
2. Whatever the basic salary.

While joining the establishment, if an employee's salary (Basic + Dearness Allowance) exceeds Rs 6500, he or she has the option to join or not join the Employees' Provident Fund scheme. However, employees whose basic salary upon joining the organization is less than Rs 6500 but increases over time to exceed Rs 6500 must compulsorily continue to be a member of the Provident Fund.

Thanks and regards,
Shesh Nath Singh
[Phone Number Removed For Privacy Reasons]

PF Contribution Transfer and Continuation Inquiry

If employees joined with a basic + DA below 6500 and did not withdraw their PF amount after resigning, they want to transfer it from the previous to the present organization. The present organization has a 6500 (basic + DA) limit, meaning those with less than 6500 are covered, and those above 6501 are not. Can the employee continue the PF contribution in the present company if their basic + DA is above 6501?

Dear Sir, PF deductions start once they are applicable and continue indefinitely if the basic salary is more than Rs. 6500 or Rs. 100,000. However, the employer is only liable to pay the employer contribution up to Rs. 6500.

Additionally, please note that if an employee rejoins the company after being a PF member during previous service and now joins with a higher salary (basic salary more than Rs. 6500), they are entitled to the same account number as per statutory requirements.

Thanks and best regards.

You have to deduct PF amount at 6500/-. If an employee's basic salary is above 6500 and they are not a PF member previously, then one has to submit the relevant documents to the labor commissioner. The labor commissioner is the authorized person to exempt the employee from PF.

You have to deduct PF amount at Rs. 6500. If an employee's basic salary is above Rs. 6500 from joining and they are not a PF member previously, then one has to submit the copy to the labor commissioner. The labor commissioner is the authorized person to exempt them from PF.

Nitin Pawar
Head HR & Admin

Once an employee has been covered under the provisions of the PF Act and subsequently his salary increases beyond Rs. 6500/-, he will continue to be a member. You cannot exclude him from coverage just because his salary has increased beyond the prescribed ceiling of Rs. 6500/-. Vasant Nair