Confused About PF Deductions? Can We Limit It to Rs. 780 for New Joiners?

Dear All, In my company, we are deducting PF at 12% of the basic salary. Now, I have a new joiner who wants a maximum of Rs. 780 to be deducted as the PF amount from his salary. The person handling PF is not giving him this choice. However, I am aware that there is an option to have a maximum of Rs. 780 deducted as the PF amount, as this rule existed in one of my previous companies where I had worked. Can anyone advise on this?

Regards,
Shalini

Dear Shalini,

In PF, there will be no choice to deduct a particular amount; it is compulsory to deduct 12% from his basic. Otherwise, there is a clause: if his basic is crossing more than 6500/-, then we can deduct the 12% up to 6500/- basic.

Regards,
Srikanth

Hi Shalini,

The new employee who is asking for the deduction of Rs. 780 is 12% of Rs. 6500, which is as per the EPF Act of 1952.

Regards,
Param

Dear Shalini, as per the PF Act of 1952, it's mandatory to deduct an amount as PF, which is 12% of the salary (Basic + DA) if it is up to ₹6,500 per month. This means that only employees whose salary at the entry-level is less than or equal to ₹6,500 per month are eligible for PF. In this case, 12% of ₹6,500 comes to ₹780.

Conclusion

The maximum amount of PF that can be deducted from an employee's salary is ₹780. However, there is an exception to the rule for employees who are drawing a salary (Basic + DA) of more than ₹6,500 per month.

Regards,
Vishal
Labor law student

Hi all,

Please let us clarify the following point: if an employee is joining and is getting a salary of more than 6500/-, is there any exemption to not deduct PF contribution from their account?

Waiting for your reply and further procedure, like if any Form 11 needs to be submitted.

Hello Mr. Janardan,

Yes, a new employee will have the choice not to deduct the PF from his salary if his basic is more than ₹6500.

In case the employee's salary is above ₹6,500 as basic, then is it compulsory or not to deduct PF from his/her salary.

I have corrected the spelling, grammar, and punctuation errors in your text and formatted the paragraphs appropriately. If you need further assistance, feel free to ask.

[QUOTE=MANOKAVIN;1145692]
Hi Shalini,

If his salary is 6500, you can deduct PF amount as 780. Otherwise, you can calculate 12% PF from his basic + DA.

Dear Shalini,

Thanks. In case the employee is willing to contribute PF even if his/her salary is above Rs. 6,500/-, then what?

Thanks for your valuable comments. Now, my another query is if we are not deducting his PF amount, shall Employers be eligible to pay 13.61% of contribution, including the pension contribution of 8.33%. Also, let us know what will be the procedure to enable the exemption.

Dear Concerned Sir,

I want to know how the government fixes minimum wages and what the basis is.

Thank you.

This restriction can be from the employer's side, not from the employee's side.

An employee's deduction has to be a minimum of 12% of the basic salary. For example, if the basic salary is 7000, then it has to be 12% of 7000 (it cannot be 12% of 6500). However, an employer has the option to restrict their contribution to 12% of 6500 (i.e., they may not contribute 12% of 7000).

Regards,
Jeene

Hello to all, There is one more rule called voluntary PF contribution. For this, any employee whose salary is equal to or more than $6500 can contribute a maximum of 20% of his/her basic as PF.

Voluntary PF Contribution

In Form No. 3A, there is an option for voluntary PF contribution where you have to input the amount.

Employer's Contribution

As far as the employer's part is concerned, the employer has to pay 12% only if the basic is less than or equal to $6500. For basics higher than this limit, the company has exceptions.

Thanks,
Sanju Singh

Dear All, I've gone through all the discussions, and I would like to present my conclusion. If anyone is receiving a salary (Basic+DA) exceeding 6500, and both the employee and employer agree to deductions from the total salary (Basic+DA), then deductions can be made. However, it is mandatory for the employer to deposit Rs. 541/- into the pension fund (A/c 10), and the remainder should be deposited into the EPF (A/c 1). Additionally, the wages for account no. 10 should only include Rs. 6500 for that employee. I hope that my opinion clarifies everything.

Please let me know if you need any further information. Thank you.

Best regards

Hi all, my total salary is 16,000, and the basic salary is 11,200. I had taken a leave in the month, so my total basic salary is 10,839. For this, my PF will deduct Rs. 6,500 @ 12% = Rs. 780.00. My employer deducted this leave from Rs. 6,500 and made my PF Rs. 755.00.

Is it right? Please confirm.

Regards,
Vikas Gupta
[Phone Number Removed For Privacy Reasons]

Hi, I am working as an HR in a construction company. I have a query: Do we have to deduct PF from laborers' payments? If yes, what are the rules for PF deduction? Kindly reply urgently.

Provident Fund Deduction Policy

Deduction of Provident Fund (PF) from a salary higher than ₹6,500 is solely the company's decision. If the company agrees to deduct, it is possible to deduct PF.

Regards,

[QUOTE=karkerapramod;1145810]

If the basic salary is above Rs. 6500, is it compulsory to deduct PF?

The employee's demand is legally right. According to Paragraph 30 of the EPF Scheme, 1950, and other provisions, an employee drawing wages (Basic + DA) exceeding Rs. 6,500 is liable to PF contribution only to the extent of Rs. 6,500, i.e., Rs. 780.

Regarding Employees Drawing Basic Wages Exceeding Rs. 6,500

For employees drawing basic wages exceeding Rs. 6,500, they can be regarded as excluded employees and are not liable for PF deduction if they were not members of the fund previously. For statutory compliance, the employer is advised to take a declaration from the concerned employee to that effect. For employees who have PF membership, PF contribution is mandatory to the extent of Rs. 6,500 even if the salary earned is over and above that figure.

Regards,
Janardhan

If an employee's basic salary is $6000, can we deduct the PF or not? Please help me out.

Thank you.

Is providing PF mandatory for a company or is it optional? Some companies provide PF only for one year from the date of joining, after which they do not offer it.

Dear Shalini,

Currently, the PF limit is ₹15,000 for the basic, and you can calculate 12% of it. However, my basic is ₹17,000.

So, please provide me with the deduction amount for the basic of ₹15,000 or ₹17,000.

Jay Patel
Assistant HR / ADM
Mobile: 08866266743
Email: jay9066@gmail.com

Hi Manoj,

I work as a teacher on a daily wage basis. My monthly salary is 10,000. I need to calculate my salary for 16 days after deducting the 12% PF. I received 4,379 for 16 days in July. Can you please assist me?

Thank you.

Salary divided by working days multiplied by present days equals gross salary. However, gross salary and basic salary are different. The same formula may be used for calculating your PF applicable basic plus DA.

Jay, please note that your actual basic salary is INR 17,000, and it is not mandatory for PF deduction if it exceeds INR 15,000. However, if both you and your employer agree, you can opt to deduct either INR 17,000 or INR 15,000. Salaries of INR 15,000 or more are not applicable for pension as per the September 2014 amendment. For any further clarification, please contact A. Sirajudeen at 9940073799.

HR Statutory Consultant
Chennai