Understanding PF Obligations: Can Employers Skip PF for Salaries Above Rs 6,500?

Hi all, my question is if an employee's wages (basic + DA) exceed Rs 6,500 per month, can the employer decide not to pay PF at all? Another question is if a worker's salary is Rs. 10,000, can the employer show all of his salary as Basic? In this case, is the company liable to pay any PF at all?

Please help me with your valuable replies with suitable sections of the PF Act if possible.

Thanks in advance to all those who take the time to reply.

Yes, up to ₹6,500, it is compulsory to deduct PF after work. It's the employer's decision whether to deduct the PF or not. Basic can be ₹10,000/- on the total salary of ₹10,000/-.

Understanding PF Contributions for Employees

Whether I know... it is helpful for you. Maybe it is wrong from any other angle or not suitable reasons/satisfied for you. But if any employee's basic salary (only basic, not any other allowances) is above Rs. 6,500 per month, meaning if it is Rs. 6,501 per month, then he is able to decide to pay PF or not. It is a subject that is decided by both the employee and employer.

No employer/company wants to pay his PF contribution on gross salary (if gross salary is Rs. 10,000). Companies/employers always want to show the employee's basic salary as less than Rs. 10,000 (gross salary). This is because the employer pays 13.61% on the basic salary as PF contribution for an employee.

Regards,
Manish Upadhyay
Ajay Carpets, Sec.-18, Sarhaul, Gurgaon

Hi, the Act clearly states that up to Rs. 6,500/-, it is mandatory. Even after that, his membership shall be continued. In that case, the employer is liable to pay his contribution only on Rs. 6,500/- (wage ceiling in the Act).

Yes, the company can bifurcate an employee's salary. However, if the basic and DA are both up to Rs. 6,500/-, the employer will have to pay the contribution.

Regards, Rajesh Gupta

EPF Contribution for High-Salary Employees

Regarding a new employee whose salary is above Rs. 6500, it is not mandatory to enroll in and contribute to EPF. However, for an employee already registered with EPF, the membership should be maintained even if the salary exceeds Rs. 6500.

Regards,
Abbas.P.S

Hi, If an employee is an old member and has not withdrawn his PF, he is eligible for PF even in a new organization where his salary is more than Rs. 6,500/-. The employer will have no choice but to make a contribution on salary up to Rs. 6,500/-.

Yes, the company can pay the entire amount in basic. But again, PF shall apply if he falls in para 1.

In the new case of joining on a salary of Rs. 10,000/-, where the employee has made a declaration on Form-11 that he was never a member of PF or he has withdrawn his PF accumulation and is no longer a PF member, then only the employer is at liberty not to make a contribution. This is what I know.

Regards,
Rajesh Gupta

Hi, if an employee is an old member and has not withdrawn his PF, he is eligible for PF even in a new organization where his salary is more than Rs. 6,500/-. The employer will have no choice but to make contributions on the salary up to Rs. 6,500/-.

Yes, the company can pay the entire amount in basic. But again, PF shall apply if he falls in para 1.

In the case of joining on a salary of Rs. 10,000/-, where the employee has made a declaration on Form-11 that he was never a member of PF or he has withdrawn his PF accumulation and is no longer a PF member, then only the employer is at liberty not to make contributions. This is what I know.

Regards, Rajesh Gupta

Clarification on PF Contribution Obligation

Your statement that "If an employee is an old member and has not withdrawn his PF, he is eligible for PF even in a new organization where his salary is more than Rs. 6500/-. The employer will have no choice but to make a contribution on salary up to Rs. 6500/-." is not correct. If an employee draws a salary of more than Rs. 6500 at the induction stage of new employment, the employer has no obligation to contribute to PF. Whether he has a PF account in the previous employment or not will not have any role in the new employment.

Abbas.P.S