New Employee Wants PF Exemption Due to Investments: Legal Concerns and Opinions?

Dear All,

One of our employees, who joined the organization 2 days ago, has submitted a request for voluntary exemption from PF, citing that he has already made investments totaling Rs 1 lakh. The company deposits an equal 12% of the individual's basic salary and does not wish to allow exemptions of this nature.

My Questions Are:

1. If the company turns down this exemption request, can there be any legal complications?
2. What is your view on these kinds of exemption requests?

Looking for an early response.

Regards,
Fatima

Statutory requirements cannot be diluted based on an individual's request. They must be complied with.

As per the statutory requirement, an employee who is drawing a basic salary plus DA of less than 6501 (as per the PF Act) will be covered under the scheme. Individual requests cannot be considered, and there are no legal complications. If the salary is more than 6500/- or the age is more than 58 years, the employee can be exempted.

PF Exemption for Employees with Higher Basic Salary

If any employee whose basic salary is more than 6500 has never been a member of PF or has withdrawn the PF amount, then PF exemption is possible. However, certain legal requirements must be followed:

1. Fill out Form 11.
2. Obtain an undertaking from the employee.

These documents should be kept in the personnel file of the employee.

Regards

Mandatory Provisions of the Employees' Provident Funds & Miscellaneous Provisions Act, 1952

First of all, I would like to inform you about the mandatory provisions of the Employees' Provident Funds & Miscellaneous Provisions Act, 1952. According to this act, any employee who is drawing Rs. 6,500 or less as basic salary, the employer is obligated to deduct the provident fund, and compliance is mandatory. However, if an employee is drawing more than Rs. 6,500 as basic salary, then it is up to the employer whether they want to consider the employee's request for exemption or not.

If the employer accepts the request, they must fill out Form No. 11 and select the option "(e) I have never been a member of any Provident Fund and/or Family Pension Scheme." If the employer rejects the request, there are no complications in this regard for the employer.

Regards

Hi, Fatima, explain to him that he would benefit more if he has a PF account since the company is contributing the same amount. Even if he doesn't require PF contribution and if his basic salary is more than 6500/-, then he should fill out Form No.11 and obtain a signature.

Regards

Dear All, it appears to me that the fellow is quite young and perhaps is under the impression that he can save only Rs. 1 lakh in a financial year for an income tax rebate. He is entitled to get a rebate for Rs. 1 lakh savings, but nothing prevents him from saving more. He is not a loser in any way. He gets an equal amount of the employer's share plus pension benefits. This may please be explained to him. He may agree to be covered by PF and the allied EPS 1995. If possible, Fatima Madam may show this discussion to him and post his reaction to it. Thanks and regards to all.

EPF Membership and Exemption Clarification

First of all, as described by Pon, "Statutory requirements cannot be diluted on an individual's request" is true. Secondly, if the basic salary is Rs. 6500/-, he can't be excluded. Thirdly, once he becomes a member of EPF, he can only be exempted after withdrawing the same. Withdrawal is only possible if he tenders his resignation. After resignation, on rejoining, there should be a service break which may affect the gratuity part.

Secondly, it is noted that the benefits of EPF include providing 9.5% compound interest annually, which is not provided by any other scheme. Whether one invests 1 lakh or 10 lakh, EPF provides interest-free loans and other benefits. Lastly, membership of EPF is the only proof that he is an employee of the company. Any discrimination can be subject to the law as the date of membership and deductions are proof in themselves.

Thanks and Regards,

Sumit Kumar Saxena
[Phone Number Removed For Privacy Reasons], [Phone Number Removed For Privacy Reasons]

Deduction of PF is a mandatory requirement and cannot be exempted in any case.

Regards,
M.L. Barber

Dear All,

I would like to sincerely thank all of you for taking the time to respond to my query. Special thanks to Mr. Sumit, Mr. Mukesh, Mr. Shyam, and Mr. Shekhar. The employee in discussion is drawing a handsome salary.

Based on all the suggestions that I received, we managed to do both:

1. Convince him to enroll for the same.
2. Roll out the company policy on the matter, mentioning that such exemptions are not allowed.

The query has been settled peacefully. Thanks to CiteHr and the professionals who helped me.

Regards,
Fatima