Can Employees Opt Out of PF Deductions and Receive the Money Directly? Seeking Advice from Seniors

To all seniors,

I have a query regarding the PF deduction. Is it feasible that if all the employees in the organization are getting the PF deductions, anyone who doesn't want to have the PF deducted can exercise an option to receive that money in hand?

Looking forward to your response.

Thanks

Yes, you can do it. The person whose basic salary is more than Rs 6500 is not covered under PF. So, just keep their basic salary over 6500, like 6550 or 7000 or so. I hope it's clear to you.

Regards

An employee can make an application for exemption in Form-1 in terms of Para 27 of the Scheme 1952. Upon receipt of such an application, the P.F Commissioner can exempt him from the Act, subject to the condition that he is enjoying similar benefits with more favorable terms under the company's policy.

In your case, all the employees are covered under the P.F Act, and in all probability, you won't frame any policy for one person. Therefore, he has no other option but to be covered along with others.

Regards,
B. Saikumar
HR & Labour Law Consultant
Chipinbiz Consultancy Pvt. Ltd
Mumbai
Tel: [Phone Number Removed For Privacy Reasons]

Thank you for the valuable information regarding my query. In case a majority decision is made and the management is then asked to stop the PF deductions and provide cash in hand instead, would that be feasible?

I also would like to inquire whether employees are entitled to receive PF receipts from the employer.

Looking forward to your response.

Thank you.

Conditions for Exemption from PF Act

If one is not covered under the PF Act, there must have been two conditions the individuals would have to fulfill:

• He is no longer a member of the PF fund.
• He needs to give a declaration in Form-11.

Under condition 1, he should have withdrawn his PF accumulations and therefore ceased to be a member of PF. Under condition 2, he is required to submit Form 11 stating that his basic salary exceeds the ceiling limit, thus exempting him from PF coverage.

Under these conditions, yes, you can exempt him from being covered under PF.

Regards,
Balaji

In the organization where I have joined as a Finance Manager, there are employees who have opted not to go for PF deductions. Their basic salaries are more than Rs. 6500 per month. My concern is whether this is acceptable or will it attract a penalty under any sections of the PF Act/rules at a later date.

Regards

In the case of PF deduction for employees having a basic salary of more than Rs. 6500/-, is it obligatory under law to deduct PF to the extent of Rs. 6500/-? Is it mandatory to obtain Form 11 in all cases where the basic salary is more than Rs. 6500/- to keep the employee out of PF?

Regards,
Yogesh Pujara
General Manager
Sebacic India Limited - Vadodara

Shops and Establishments Act and PF Account Queries

I am working in an ad agency. We have a staff of 45, and it's a 5-year-old company based in Bangalore.

1. Is the Shops and Establishments Act necessary for all companies?
2. How do I apply for a new PF account? If returns or challans are delayed, is there a penalty?

I need to register a PF account for my company. Please guide me through the entire procedure.

Regards,
Ritu

Feasibility of PF and ESI Deductions

Is it feasible for employees in an organization to have both PF and ESI deductions in their salary? Also, please help me understand the respective benefits for both employees and employers.

Looking forward to your response.

Thanks

You have to get Employee Form-11 signed if you are following the procedure below.

Regards,
Kunal Kumar

Exemptions under the EPF Schemes

Provident Fund

An individual member receiving Provident Fund benefits on par with or better than statutory provisions can apply for exemption in Form 1 under para 27. Employers can apply for exemption in respect of a class of employees receiving similar or better benefits than the statutory P.F. Scheme under P. 27A, subject to the conditions governing the grant of exemption. The employer can seek exemption from the P.F. Scheme for the entire establishment if the majority of the employees also consent to the exemption, subject to certain conditions governing the grant of exemption and certain formalities.

Pension Scheme

The employer can avail exemption for the establishment as a whole, with the consent of the majority of employees, if an alternative pension scheme is formulated by the establishment with benefits either on par with or superior to the EPS '95. This is subject to certification of the viability and long-term sustenance of the scheme by an independent qualified actuary and satisfying the other conditions prescribed governing the grant of exemptions. There is no provision for exemption of individuals or for a class of employees.

EDLI Scheme

The establishment can get exemption from the EDLI Scheme if the employees therein are entitled to a benefit in the nature of insurance, whether linked to their P.F. deposit or not, and without paying any contributions. If the above exemption has been obtained by your organization, no penalty will be incurred.

Regards

See, this is in regular practice. However, the employer should have a PF establishment code if the number of employees exceeds the required threshold. This is based on my knowledge, and we are following the same procedure. Additionally, Form 11 should be signed for each employee who is not under PF.

The employees cannot on their own decide not to be covered by the Scheme or to be exempted from the scheme. They have to make an application to the P.F Authorities seeking exemption, and the P.F authority will exempt them from the P.F Act only when they are enjoying similar benefits under the company's scheme with more favorable terms. The authority may grant such exemption with terms and conditions as detailed under Para 27-AA of the scheme.

If the employer has a P.F scheme of his own of which the employees are members, he shall constitute a Board of trustees who shall provide a statement of accounts to the members of such a private fund.

Employee Coverage Under P.F Scheme

The data provided is not sufficient. However, employees whose pay exceeds Rs. 6500/- p.m (basic + DA + retaining allowance + cash value of food concession, if any) at the time of joining need not be covered as members of the Fund unless they volunteer to make a request to the P.F Commissioner to enroll them.

Regards,
B. Saikumar

HR & Labour Law Consultant
Chipinbiz Consultancy Pvt. Ltd
Mumbai
Tel: [Phone Number Removed For Privacy Reasons]

Dear All Seniors,

I have a question related to PF. Currently, there is no law that specifies the age of retirement. However, according to the Employee Pension Scheme, an employee is exempted from the Pension Scheme after completing 58 years of service.

PF Share for Employees Exempted from Pension Scheme

Now, my question is, if an employee is no longer part of the pension scheme, what percentage of the PF share would apply to these employees? I would appreciate your advice on this matter, as we have several very senior employees in my company who are nearing this age limit.

Any assistance would be highly appreciated.

Regards,
Kunal Kumar

Yes, if the basic salary of the employee is more than 6,500 per month and the employee is not a member of the PF or has withdrawn the PF amount taken under Form 11, you can exclude him from PF liability.

All the 24% of basic pay can be put into the EPF account. He can be exempted from PF. Since they are 58+ years, surely their basic salary will be more than ₹6,500/-. He can apply for a pension after attaining the age of 58.

How to Get Pension

If you have attained the age of 50 years or more and have completed a total service of 10 years or more, and if you are not receiving any other EPF Pension, you need to apply in Form-10D at the EPF Office where you last worked through your last employer. If you want to draw a pension from a different place, you must furnish the appropriate Bank/Post Office address in the application form. Pension is distributed through Post Offices or through some designated banks only (e.g., Indian Bank, SBI, Indian Overseas Bank, HDFC Bank, ICICI).

Regards

Good morning, everyone. I have a confusion. Can anyone help me with wanting double deduction of PF from my salary? In this case, what steps would be suggested, and who are the concerned contacts in the company to provide a solution to my query?

Regards,
Vishal Chaturvedi

You can contribute up to 100% of your basic salary to the EPF. However, certain companies have norms that limit it to 20% (12% EPF contribution + 8% VPF contribution). Since the company aims to maintain uniform PF contributions for all employees, they opt for 12% on each side. If you wish, you can discuss with the HR department to increase the voluntary PF amount, but the company typically does not encourage it.

Note: You may encounter issues when withdrawing your PF in large companies where consultants calculate at 12%. They often drag the formula application across all cells, potentially causing mismatches in your calculations. However, if they have calculated correctly, there should be no issues. Additionally, changes to contributions might be possible if many individuals are willing, but for a single person, the company may not adjust the contribution.

Kind regards