Is It Mandatory to Include Higher Earners in Provident Fund Contributions?

Dear CitiHR,

Our company is contributing to the PF fund only for employees who are drawing less than 6500/-. The remaining employees are not included in the scheme. Is it compulsory to include employees drawing more than 6500/- and contribute, or is it left to the discretion of the employer? Is there any rule in the PF Act?

Regards,
Fabes

Hi, I know a person who is drawing 13,000 per month without any deductions like PF. The company has approximately 100 staff, and it is an IT Company.

"Is it compulsory to include employees drawing more than 6500/- and contribute, or is it left to the discretion of the employer? Is there any rule in the PF act?"

Let me know what the law says.

Regards

Dear Fabes,

As per the Act, employees who are drawing the Basic + DA equal to or less than Rs. 6,500, the deduction for such employees towards PF is mandatory. If such a person, in due course of employment, exceeds the limits, even then they are eligible to receive the PF contribution.

If a person at the time of joining the organization draws the Basic + DA more than the limit, this totally depends on the employer's discretion and is surely not mandatory.

Regards,

Ashok Kumar
09818646314

Dear,

As per the rules, the limit is a basic 6500 per month. However, for employee benefits, the company deducts PF (employee contribution + employer contribution) as it helps in saving for the long term and provides tax benefits. Most companies do this for the benefit of the employees.

Thanks,
Parveen

Dear all,

I work as a third-party HR for a retail client. Can somebody clarify if PF is reduced on Basic+DA or only Basic salary? Furthermore, what are the other options besides providing OT to employees, such as providing dinner, dinner allowances, conveyance, etc.? Which parts of a pay would attract ESI?

Expecting your earliest response.

Thanks & Regards,
Subhashinee

For EPF, it is Basic + DA wages taken for contribution. For determining the eligibility for coverage, OT is not taken as part of the salary. However, if a covered employee earns OT in a month, then ESI contribution to the total amount of salary, including OT, has to be paid. Instead of OT, if you pay any other allowance, like conveyance allowance, you can avoid contribution. But to what extent? If you pay conveyance instead of OT, and when the Factories Inspector calls for details of overtime work done, you are bound to show the amount of OT given; otherwise, it is a violation of the Factories Act. Therefore, always pay as per head only.

Regards,
Madhu.T.K

I want to know the guidelines for PF deductions on, within, or above the 6500 salary slab. Please send me the reply ASAP.

Regards.