Can Employees Choose to Contribute More to PF Than the Standard Deduction? Let's Discuss

Employee Contribution Exceeding Standard Deductions

What if an employee wants to exceed their contribution part? For instance, an employee has wages of 51,500 Rs. (Basic + DA), and they wish for the company to deduct 4,500 Rs. per month. Is this permissible?

Regards

Yes, the company can deduct the same amount, but they won't pay the same amount. The company shall contribute only Rs. 885/-.

Regards,
CK Agrawal
Sr. Executive HR

Voluntary PF Contribution

Under voluntary PF contribution, an employee can extend their PF contribution up to 80% of wages (Basic + DA), but the employer's contribution will be fixed at 12% only.

Fill out the voluntary PF form to increase your contribution. It will be a wise decision and a good way to save for the future.

Dear All,

EPF Act of 1952: Employee and Employer Contributions

1) The employee contribution shall be 12% of Basic Salary plus DA, if any.

2) The employer's liability for PF contribution will be on Rs. 6500/-, i.e., Rs. 780 per month. For example, if one's Basic salary is Rs. 7500, their PF contribution will be Rs. 900, and the employer's liability will be restricted to Rs. 780/-.

3) In case the employee is in CTC, the employer's liability may be a matching contribution or Rs. 780/-, depending on salary negotiation.

Last but not least, the company's contribution is restricted to Rs. 780/-. However, some companies are also paying the matching contribution.

Feel free to contact the undersigned at Mobile no [Phone Number Removed For Privacy Reasons].

Warm Regards,
P.V.R. SHARMA

I can't understand your people's calculation. Please explain it to me.

Understanding PF Deductions

As per my understanding, there is a 12% deduction from the employee's side and another 12% from the employer. Under the voluntary PF scheme, the employee can opt for a maximum deduction of up to 8%. Therefore, the total deduction cannot exceed 20%.

Hi Bhargavi, as per my understanding, voluntary PF can go up to 80%, not 8%. Please correct me if I am wrong.

Voluntary Provident Fund Contributions

Voluntary higher contributions for Provident Fund (PF) can be made for more than 8%. The only thing to note regarding Voluntary Provident Fund (VPF) is that once it has been increased, it cannot be reduced without the consent of the relevant PF commissioner.

Regards,
M. Venkatraghavan

I do agree with the views of White Eagle that Voluntary PF can go up to 80%. I also agree with Mr. Venkatraghvan that once it has been increased, it cannot be reduced without the consent of the concerned area PF commissioner.

Regards,
Dinesh Adikane

As per the Act, the member has to contribute at the rate of 10% or 12% of their basic pay, D.A., and retaining allowance, if any. In case the member wants to contribute more than this voluntarily, they can do so at any rate they desire, i.e., up to 100% of basic and D.A. However, the employer is not bound to contribute at the enhanced rate.

All the best

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I agree with Mr. KVJ Raghunath, as the PF Act doesn't specify anything about the maximum or minimum contribution towards VPF. Hence, a member can contribute up to 100% of his or her Basic + DA. Also, the company need not contribute to VPF opted by the employee.

Regards,
Ravi

EPF Deduction Rules

EPF deduction is up to 6500 only. The rules are as follows:

1. If your Basic + D.A is more than 6500 (for example, 6600), it depends on the employer to continue with the employee or not. This means the employer can close the deduction after 6500.

2. If the employer has paid over 6500, the pension portion will be deducted only on 6500.

3. VPF Provision

There is a provision of VPF in the EPF Misc Act 1952. VPF can be deducted 100%. However, there is a provision in the Factory Act 1948 that no deduction can be made more than 50% of the gross salary, whether it is advance, loan, EPF, ESI, VPF, or many more deductions. At least the employee has to have something in his hand to eat.

Regards

Dear Sir, I do not agree with the latter part, i.e., voluntary contribution to one's PF needs the consent of the concerned area PF commissioner. When I was in service, I have many times made one-time savings in my PF account voluntarily to save income tax. When the ceiling of Rs.1 lakh was reached, it was stopped. The concerned Area PF commissioner never intervened. I may make it clear here that our PF was maintained by a Trust and not by the PF office, but we were following the same rules. I think this needs further discussion and valuable inputs by retired PF officers who are now on the citehr.

Regards

Dear Mr. Shyam Agarwal, Regarding the enhancement and reduction of Voluntary Higher contribution, I have earlier checked with the local PF AC, who informed me that the reduction of the enhanced Voluntary Higher contribution requires prior consent from their department. They mentioned that they maintain a separate record of higher contribution members, and it is not akin to a Savings Bank account where money can be deposited at will. In fact, according to the procedure, the Voluntary Higher contributing member must submit a declaration to the PF Office initially, although this requirement is not currently being enforced.

Concerning the pension fund, it comprises the Management's contribution. If the contribution exceeds Rs. 6500/= in salary, the surplus amount beyond Rs. 6500/= (i.e., Rs. 541/=) is transferred to the PF account of the member.

Regards, M. Venkatraghavan

Dear Mr. Shyam Agarwal,

Enhancement and Reduction of Voluntary Higher Contribution

Regarding the enhancement and reduction of Voluntary Higher contribution, I have previously checked with the local PF AC, who mentioned that the reduction of the enhanced Voluntary Higher contribution requires prior consent from their department. They explained that they monitor the higher contribution members separately, unlike a savings bank account where one can deposit money at will. In fact, according to the procedure, the Voluntary Higher contributing member is supposed to submit a declaration to the PF Office initially, although this requirement is not being insisted upon nowadays.

Pension Fund Contribution

Regarding the pension fund, it constitutes the Management's contribution. If the contribution for salary exceeds Rs. 6500, the excess contribution beyond Rs. 6500 (i.e., Rs. 541) is transferred to the PF account of the member.

Regards,
M. Venkatraghavan

Dear Shri Venkatraghavan Ji, Thank you for the clarification. Possibly, the stance taken by the concerned local PF AC may be a personal opinion or enforced within his jurisdiction, as there is no such statutory provision to my knowledge.