Is It Legal for Employers to Skip PF Deductions for Workers Earning Above 6500 in Delhi?

Dear Friends and Seniors,

I have a question in my mind; can anybody give a satisfactory reply to my query, please?

Understanding Minimum Wages and PF Deductions in Delhi

In Delhi, the Minimum Wages Act states that a graduate's minimum basic pay is more than ₹8000 (not exactly), and the minimum wages of semiskilled workers are also not below ₹6500. Only unskilled workers fall below the ₹6500 limit. The PF department says that the compulsory deduction on basic salary applies to those who are below the ₹6500 basic limit.

Given the above slab, nobody is eligible for a deduction of PF (except unskilled workers). If an employer does not deduct any PF for those whose basic pay is above ₹6500, what actions can be taken against the employer?

Thanks,
Santosh Kumar
Accounts Manager

If any employee is continuing to work in the same organization and already has a PF Account number, then they should be eligible for PF; we can't make exceptions from PF. If you feel free, call me. Regards, J.N. Modi [Phone Number Removed For Privacy Reasons]

If the employee is willing to have PF, you can deduct it. It is not mandatory, but from the company's point of view, if we deduct the PF, it shows that the company is looking after the welfare of the employees. This way, when they leave the company, they will receive a lump sum amount for their personal use (PF returns).

If you have any doubts, please feel free to call me.

Thank you.

Thank you for replying to Mr. Siva and Modiji, but I am not entirely satisfied with your responses. I would like to inquire why the government has not revised the limit if a company is paying its staff no less than 6500/- as the basic salary to avoid PF liability. Can any action be taken against such companies under the current PF act and rules?

I am looking forward to a comprehensive response.

Thank you,
Santosh

Dear Santosh,

To address this problem, recently Dr. G Sanjeeva Reddy, INTUC president and member of Rajya Sabha, wrote a letter to the Prime Minister requesting an amendment in the EPF Act and the Bonus Act to include workmen/employees earning between Rs. 15,000 to Rs. 20,000. The only amendment required in the Acts is the solution to your query!

Best Wishes,
Yogesh Jalota

According to the provisions of the EPF, every employee (including part-time workers and those employed by or through contractors) shall be entitled to become a member of the Scheme from the date of joining the factory or the other establishment. However, if the wages drawn are more than Rs. 6500/-, the employee has to intimate their desire to contribute the whole amount to the Employees' Provident Fund Organisation through the employer. The employer can also contribute the whole amount drawn as wages under intimation to the Employees' Provident Fund Organisation. However, for the eligibility for the Family Pension Scheme 1971 purposes, anyone who joins on or after 16-11-95 is compulsory to join this scheme, provided their salary/wage is less than Rs. 6500/- per month at the date of appointment.

Hope this satisfies your query.

Regards,
P.S. Dhingra
CEO, Dhingra Group of Consultants, New Delhi
[Email Removed For Privacy Reasons]
[Phone Number Removed For Privacy Reasons]

The minimum wages in Delhi consist of Basic + DA, and PF is applicable to both Basic & DA. Regarding the EPF limit, the government is planning to increase it from 6500 to 10000.

Thank you.

Thank you to all for communicating and replying to each other, especially Mr. Yogesh Jalota, who has posted good news in response to my query. Can anybody provide a copy of the letter from Dr. G. Sanjeeva Reddy, INTUC President and member of the Rajya Sabha, submitted to the Honorable Prime Minister?

Currently, the EPF Office cannot take any action against companies that are not deducting EPF from employees whose basic salary exceeds the prescribed limit. Let's work towards implementing this law for the welfare of various employees.

Thank you,
Santosh Kumar

Judgment on Salary Components for PF Purposes

Find enclosed herewith the judgment of the MP High Court regarding the components of salary for the purpose of PF. Although the PF department has not yet sent the notification for implementation, this is for your information and perusal.

Thank you.

Regards,

PF Contribution and the Universality Principle

The PF contribution has to be made on the Basic + DA, and any component of the salary which has implications of the universality principle. Now, the MP High Court in WP No. 1857 of 2011 has decided the same thing which was prevailing in the earlier judgments of the Supreme Court.

The PF inspector can examine the universality component of your company, and the PF Commissioner can direct to include any such component in the PF contribution. These components are factual and are different for different companies. So, do not confuse applying any such component to all companies.

At present, unless the limit is increased by legislation, it still remains at 6500. If the PF inspector usurps his rights for giving directions not in consonance with the Act, a writ can be filed to restrain him within the limits and for compensation for the damages, if any.

Thanks to all,

Regards,
Raj Singh Phogat

EPF Applicability and Necessity

EPF is applicable on a basic salary of ₹6,500/-. In this era of rising prices, most employers are offering more than ₹6,500/-. So, what is the necessity of the EPF rule? What will we do in the future as we age? The EPF rule should be aligned with the ESI rule.

Dear Santosh,

If any employee has an exemption for PF, then the company fills out Form No. 11. If any employee is interested in getting PF, then if their Basic+DA is more than 6500/- or 15000/- (latest amendment), the company can deduct their PF based on either 6500/- or 15000/- (i.e., 6500/- = PF Rs 780/-, 15000/- = PF Rs 1800/-).

Hi,

Please confirm if the gross salary is $18,000, the basic salary is 30% of the gross salary, and the HUA (House Rent Allowance) is 50% of the basic salary. Kindly verify if this information is correct. If there are any mistakes, please provide detailed clarification.

Thank you.