Is PF Deduction Mandatory for Employees with a Basic Salary Over 6500?

PF deduction for 6500 is compulsory because one company is not deducting PF of employees as all employees' Basic is more than 6500.

Hi,

It is mandatory that if the salaries of the employees are more than 6500, then PF deduction is to be calculated at 6500. However, the employer is free to deduct the PF for higher amounts also.

Naresh Taneja

Most companies believe in the "Deep Pocket theory" when it comes to compliance. Like thieves, they think they shall never get caught and are willing to take risks.

Surya

Any Indian organization which has 20 or more employees (not daily workers) is obliged to cover their employees under the EPF fund.

For international organizations based in India, it is not compulsory. However, if the employer wants to offer this social benefit to its employees, they can apply for membership.

For organizations with fewer than 20 employees, voluntary membership can be obtained, wherein the employees have to sign a declaration.

Hi,

The PF deduction is mandatory for a person whose salary is equal to or more than 6500. The amount deducted is fixed at 12% of the Basic Salary, deducted both from the employee and the employer share. However, the deduction made by the employer is divided into two parts as follows: 8.33% of the amount will go towards the Pension fund-1995, and 3.67% will be contributed towards the PF.

Companies that do not comply with this rule may face trouble during inspections conducted by the relevant authorities.

It is mandatory if the person is earning $6,500 or less. However, if the person is earning more than $6,500 at the time of joining, it is up to the company to provide the benefit of PF. If a person joins earning less but later starts earning more, the deduction must continue.

Thank you.

I think both are correct. Anyway, we have to face a risk during the inspection if we implement anything new without consulting a lawyer, isn't it? The lawyers are also suggesting that deductions for employer's contributions should be worked out for up to the salary Rs. 6500. Such suggestions are only in verbal words.

Dear All,

For the salary ceiling limit of 6500.00, there is a provision as follows:

1. It is mandatory to cover and deduct the P.F. contribution at 12% of basic wages if the basic wages are less than or equal to 6500.00.

2. If the basic wages are more than 6500.00, then the coverage shall be voluntary. However, if an employee is already a member of P.F., then the employer has to cover him even if his/her basic wages are more than 6500.00.

Note: This is the reason why the employer fills out Form 11 Declaration for a person taking up employment in an establishment where the E.P.F. scheme is enforced, to determine the status of their previous membership of E.P.F.

Moreover, if a person joins with a basic wage of more than 6500.00 and was not a member of E.P.F. previously, it is not obligatory to cover him under the E.P.F. scheme. Such employees are defined as "EXCLUDED EMPLOYEES" under the Act.

I hope this clarifies any doubts on the subject. For further information, please feel free to ask.

Mohd. Arif Khan

Dear Mohd. Arif,

If any establishment/industry/office has employed 10 or more people, they should be covered under the PF scheme. The ceiling to deduct is up to Rs. 6500, but the employer can deduct voluntarily if the basic is beyond Rs. 6500. If all employees' basic + DA is beyond Rs. 6500, that establishment may be exempt from PF. Once any employee is covered under the ceiling limit, PF is applicable to them.

Regards,
Bhushan

Hello,

In my previous job, my P.F. was deducted; however, at the time of resigning from the job, I elected to withdraw the amount. Now, I have joined a new private concern, and I choose not to elect for P.F. deduction. Will this matter in any case??? My basic is 6500/-, and I don't want P.F. to be deducted. Is there any way I can get exempted...

Dear,

I want to know if any person in the last company was drawing a basic salary of less than 6500/-, and if they join our company with a salary of more than 6500/- (i.e., 6700 or something else), is it necessary to legally deduct their PF, or is it voluntary? Is there any legal support for that?

Secondly, if a person was drawing more than 6500/- and contributing to the PF in their last company, does any legal obligation exist for them now in the new company?

Please let me know.

Saku

Query Regarding PF Contribution Opt-Out

I am Yogesh, currently working as an HR Executive in an auto ancillary company based in Pithampur. I have a confusion and would appreciate it if you could clarify. If an employee is covered under the PF Act but does not want to contribute to the PF scheme, what is the procedure to stop that deduction from their salary? What are the employer's responsibilities regarding this matter? Please reply soon.

Thanks & Regards,
Yogesh

Dear Mr. Yogesh,

It is not possible to avoid deducting PF contributions from an employee's salary if their Basic+DA is less than or equal to 6500. This deduction is mandatory if your organization is covered under the PF act.

Employer Responsibilities

As an employer, your responsibility is to register employees under the PF act and educate them about the same. Failure to do so may result in penalties from PF authorities.

Thanks

Dear Madam/Sir, Thank you for the reply regarding whether PF deduction is compulsory or not. Now, I want to know if an employee disagrees with deducting PF, is it possible or not? Please reply soon. This refers to an employee not willing to contribute to PF.

Thanks & Regards, Yogesh Lokhande