Confused About PF Eligibility for Salaries Above 6500? Let's Clarify Together

I am a little bit confused. I understood that an employee who is having a salary of less than 6500 is entitled to PF. However, if an employee is receiving a salary greater than 6500 up to 10000 and above, are they eligible for PF deduction? Also, please let me know how it is calculated.

Regards,
Sanjay Bhatia

Dear Sanjay, I would like to inform you that if employees are receiving wages between 6,500 and 10,000, it is mandatory to deduct PF if the employee had contributed to PF in the previous organization in India. If you hire a new fresh employee who does not have a PF number from their previous employment in India and their wages are between 6,500 to 10,000, there is no need to deduct PF; it is an optional case.

Regards, Vishal Saxena

Dear Sir,

I have two points:

1. Basic salary less than 6500 will be entitled to PF.
2. If the basic salary is more than 6500, please confirm if the employee is still eligible for PF.

Also, kindly provide any information related to PF calculations so that I can easily understand the process.

I hope this helps clarify the PF deduction criteria. Thank you.

Kind regards,
Vishal Saxena

If an employee has a basic salary of less than Rs. 6500/-, they have to be covered under EPF. If an employee earns more than Rs. 6500/-, they may be exempted from EPF.

Regards,
Raju

Thank you for your valuable reply. A person whose basic salary is less than 6500 is eligible for PF, and if it is more than 6500, it depends on the employer (mandatory). The employee can contribute 12% of his/her basic salary, but the employer will only contribute up to 6500/-. For example:

1. If the basic salary is 5000, then the employee's contribution is 5000 x 12% = 600, and the employer's contribution is also 600/-.
2. If the basic salary is 10000, then the employee's contribution may be a) 6500 x 12% = 780/- or b) 10000 x 12% = 1200. However, the employer can only share 6500 x 12% = 780/-.

Clarification Needed

Now I have some doubts. Please clarify: If a regular employee's basic salary increases above 6500/-, can we now stop his/her PF deduction if the employer and employee both agree?

Thanks & Regards,
Anjani Singh

In my previous company, I observed that a person was receiving a salary above 6500 as their basic pay without having any PF deductions. Could you please advise if this is possible?

If we haven't started the deduction from the beginning, it's okay. Since, according to government rules, it's mandatory, and new employees are ready to work according to the employer's wishes (as per the current situation - due to unemployment). However, I am also not sure about regular employees whose basic salary has increased above ₹6500 (whether to stop deduction or not). If anyone can guide, it will be my pleasure.

Regards,
Anjani Singh

PF Contribution Guidelines

Employee Basic + DA ≤ 6500, PF would be 12% on the same.

Employee Basic + DA > 6500, following options are available:

a. If the Employee PF is not deducted in the previous organization, then he can opt to be exempt from the scheme.

b. The current organization can also exempt him by filling Form 11.

c. The PF contribution can be limited to 12% of Rs. 6500.

d. The PF contribution can be on his full Basic + DA. For example, if Basic + DA = Rs. 10,000, then 12% of 10,000.

Once an employee is enrolled under the PF Scheme in an organization, he cannot be exempted in the same organization, even after an incremented Basic + DA, i.e., above Rs. 6500. In such cases, the employer can limit the PF contribution up to Rs. 6500/- or can contribute on the full Basic + DA.

Let me know if you have any queries on the same.