Is It Mandatory to Deduct PF for Employees with Basic Salary Over 6500? Seeking Advice

Hi Everyone, Please let us know one thing. If an employee's basic salary crosses 6500, is it mandatory to deduct PF from their salary? Alternatively, can we just deduct only PT and pay them the rest of the amount as their 'Net Salary'? In our company, we deduct PF for all employees, but recently, a few new employees have started asking not to deduct PF from their salary. Can we do anything to favor these employees?

Regards,
Vinay Kumar

PF Deduction for New Employees

For new employees, if the Basic + DA is more than ₹6500, then, by mutual agreement between the employer and employee, PF may not be deducted. However, once an employee is covered under the PF provision, they remain covered irrespective of their salary. The contribution can be limited to ₹6500.

It's mandatory. The PF authorities may insist on deducting a minimum of Rs 6500/- for exempted employees for social security purposes. Apart from that, it's an IT saving for the employee.

Regards,
PBS KUMAR

EPF Enrollment and Salary Ceiling

Those who enrolled in EPF will not be exempted until the termination of service, even if their salary crosses the ceiling limit. Regarding new employees whose salary is above Rs. 6500, registration with PF is optional. Contribution beyond the ceiling salary (Rs. 6500) is also optional.

Regards,
Abbas.P.S

Subject: Re: Is it PF Mandatory to Deduct from Employee's Basic > 6500

Mr. P.S. Abbas is 100% right.

D.K. Parashar

PF Contribution: A Statutory Obligation

PF contribution is statutory. We, as HR professionals, should encourage PF contributions. It helps employees significantly, not only now but also in the future. Additionally, the tail end is subject to company policy.

Regards,
Ramesh Y

Yes, as per the rules, it is mandatory for a person earning ₹6500 to have deductions. Of course, there are other ways as suggested by seniors. In other cases, employees who do not wish to have PF deducted from their salary can be asked to sign FORM 11. However, there are compulsory deductions for certain salary slabs. According to the rules, for certain salary slabs, I believe up to ₹15,000, PF is compulsorily deducted even if you submit Form 11. (Kindly cross-check this information as I am unsure about the salary slabs.)

Moreover, if an employee is not interested in having their PF deducted from their salary, they can submit Form 11 to indicate their preference. I request seniors to provide their input on this matter.

Regards,
Sonali

Dear all,

As correctly stated, a newly joining employee drawing the PF wages (basic + DA + Retaining Allowance) more than ₹6,500 per month could be exempted from Provident Fund coverage, benefits, and deductions by submitting Form-11 to the EPFO, subject to the proviso that he has not been a member of the Provident Fund at any point of his prior employment.

However, if the new joiner's basic wages exceed ₹6,500 per month, he would contribute 12% of the existing PF wages, but the employer shall be required to pay a contribution of an equal amount only to the maximum limit of ₹6,500 per month, irrespective of PF wages.

Once a member falls into the scheme, there is only one provision for not getting deducted PF, and that is... he should work only in such an establishment that is covered under the EPF and MP Act, 1952.

Thanks and regards,

Prasiddh, Goa

[Phone Number Removed For Privacy Reasons]

It is not mandatory to deduct PF beyond Rs. 6,500/- [Basic+DA] as of date. Therefore, the employee in question can take home a higher net salary.

Regards,

An employee drawing a salary (Basic + DA) up to Rs. 6500/- has to be mandatorily enrolled as a member. If an employee's salary (Basic + DA) exceeds Rs. 6500/-, with the consent of the employer, he can join the PF. If he was not already a member, he can fill up Form 11 for exemption. If he was a member under PF with previous employment and has not withdrawn the full and final amount from the EPFO, he can continue to be a member regardless of his salary. The employer will only contribute his share up to the ceiling limit of Rs. 6500/- only.

EPF Deduction for Salaries Above 6500

For new employees, if the salary is more than 6500, there is no need to deduct the EPF from an employee. However, if an employee is covered by EPF and their salary is now more than 6500, then the PF will only be deducted on 6500. It is important to note that the EPF limit may soon increase to 10000 or even 15000.

Thanks,
Pawan Bhatia
[Phone Number Removed For Privacy Reasons]

PF Deduction Guidelines

As per the PF Act, if the basic salary plus DA is ₹6,500 or less, it is mandatory to deduct PF from the employee's salary. If the employee continues in employment and their basic salary exceeds ₹6,500, it depends on the employer whether to restrict the PF deduction to the maximum limit (restricted amount ₹780).

PF is a mandatory statutory compliance that needs to be adhered to for all employees, whether they opt in or opt out. If PF authorities inspect the premises and verify PF documents, they will question the employer, not the employee. The employer will be held liable for not including all employees under the PF Scheme. Such schemes are introduced for the benefit of the employees. I understand that Form-11 is not for employees who are willing to opt out of the PF scheme.

Form-11 Interpretation

The interpretation is different. I have provided Form-11 below:

FORM 11 (Revised)

(For unexempted Establishment only)

Declaration by a person taking up employment in an establishment in which the Employees' Provident Fund and Family Pension Fund Scheme are in force:

I .................................................. ...... ** son/wife/daughter of ..............................................

(Name)

* hereby solemnly declare that:

(a) I was last employed in .................................................. ...........................................

(Name and full address of the establishment)

and left service on ..........................(prior to that I was employed)...........................

from ............................. date to .................................. date

(b) I was a member of .................................................. .............................. provident fund

and also of the Family Pension Fund from ..................... to ..................... and

but not

my account number(s) was/were ........................./.........................../........................./

(c) I have/have not withdrawn the amount of any Provident Fund/Family Pension Scheme.

(d) I have/have not drawn any superannuation benefits in respect of my past service from any employer.

(e) I have never been a member of any Provident Fund and/or Family Pension Scheme.

(f) I am drawing/not drawing pension under EPS 1995.

(g) I am a holder/not holder of Scheme Certificate.

(h) Scheme certificate surrendered/not surrendered.

Signature or **right/left hand

Date:............ thumb impression of the employee.

__________________________________________________ _______________________

(To be filled in by the employer only when the person employed had not already been a member of the Employees' Provident Fund)

Shri.............................................. ...... is appointed as .................................................. ..

(Name of the employee) (Designation)

in .................................................. .................................................. ................................

(Name of the Factory/Establishment)

with effect from.............................................. .................................................. ..............

(date of appointment)

Date of completion of 120 actual working days in a period of 6 months or less or six months' continuous service or date of confirmation

From ...... to....... No. of days worked whichever is earliest. Date of admission as a member of Employees' Provident Fund.............

.................................................. .

Account No............................

Date: Signature of the Employer or Manager or other Authorised Officer.

*(1) Strike out whichever is not applicable.

N.B.: The principal employer should have filled it up also in respect of employees to be employed by or through a contractor.

(For Unexempted Establishment only)

Contract Rest Total

Total No. of Employees.....................................

Total No. of Subscribers....................................

It is better to counsel the employees who wish to opt out of the PF scheme that paying PF is good for their financial well-being.

With regards,

Madhusudan

Mandatory PF Deduction for Basic Salary of 6500

It is mandatory to deduct PF if the basic salary is 6500. If the employee doesn't want to have their PF deducted, they can write a letter in that case.