Employee Wants Voluntary PF Deduction: How Do We Handle This Request?

Hi, one of our employees wants to have PF deduction as he is out of the slab. Kindly let me know the procedure. He is willing to contribute both the employee and employer contributions. Looking forward to your reply.

Regards,
Meena

Hi Meena, try to convince your management to contribute to the Employee Retirement (ER) contribution from the company itself. If an employee demands it, then the company has to contribute. If the company is not accepting, you can adjust his PF contribution in his Gross salary or Cost to Company (CTC). However, in the payslip, do not disclose that both contributions are from his wages. 

Yes. If an employee's basic salary exceeds a certain threshold, based on specific criteria, he or she shall be exempted. However, there are certain clauses where even if the basic salary exceeds, eligibility applies:

1. If the basic salary exceeds ₹6500/- due to an increment or promotion, then PF contribution becomes mandatory.
2. In the case of a job change or new appointment, if the employee was eligible for EPF contribution in the previous company, the new employer must also contribute.

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

Regards

Now, how can we enroll him along with the existing list, and how can his contribution be made? Please let me know the procedure.

Those who are crossing Rs. 6500 (if a new employee with a starting salary) do not need to be covered under PF. Based on the discretion of the management, if the management is willing to contribute, it is okay.

Regards,
V. Subbarao
[Phone Number Removed For Privacy Reasons]

As per the PF guidelines, the basic salary has to be less than Rs. 6500/- to be eligible for PF coverage. Once an employee has crossed this limit, PF eligibility ceases, and it becomes a voluntary contribution. It is discretionary for the management to contribute its share. However, most companies, to be on the safer side, calculate the PF contribution based on the minimum amount as stated above and contribute their share, thus avoiding complications.

Another alternative for an employee who wishes to contribute both shares from their salary would be to avail the PF contribution on the cut-off limit of Rs. 6.5k and opt for a PPF account for the balance amount. This way, the employee could claim an 80C deduction of up to Rs. 1.0 lakh, and the returns by way of interest from PPF are also exempted from income tax.

Regards,
Raj.

PF Deduction and Contribution Waiver Cases

PF deduction and contribution are to be waived for the following cases only:

• For trade trainees since they are involved in training, and it should not be considered as a case of employment.

• For any employees whose basic salary is more than Rs. 6500 per month, provided that this is their first job, and so they should not have any PF code allotted/assigned to them.

• For employees switching from one organization to another, and the candidate had partially or fully withdrawn their fund from the PF authority. In such cases, Form 11 has to be signed by the candidate and handed over to their new employer as a declaration for such withdrawals made.

Thanks & Regards,
Arnab Dasgupta

Pyramids Staffing Solutions Pvt Ltd

[Phone Number Removed For Privacy Reasons]

In the case of exempted employee coverage, it is a policy of management. Some managements may consider contributing to employees who are drawing a salary higher than Rs. 6500 but restrict their contribution to Rs. 6500.

Many employers may deny enrolling employees who are not eligible as per the Act. Please consult your employer and follow their instructions.

Regards,
D. Gurumurthy
LL. HR. IR Consultant,
Hyderabad.

Dear seniors, please let me know if initially, the company was not deducting PF for employees with a basic salary above Rs. 6500. However, now the same company wants to contribute to PF for all employees. Is this possible?

Thanks,
Anchal

Hi Anchal, yes, it is possible. For that, you should take the declaration form signed by both the employee (EE) and the employer (ER). 