New Employee's PF Deduction Dilemma: Can We Stick to the 6,500 Ceiling?

Hi, we have a case where we need an expert opinion to convince the management of the company. One employee recently joined, and he was contributing to PF during his previous employment. His Basic + DA exceeded 20,000.

In our company, we operate with a ceiling of 6,500. The employee claims that we should deduct his PF based on the basic ceiling of 6,500 as this is his right and must be done according to the PF Act.

Please advise if this is possible. I will need some references from the Act or any judgments regarding this.

Thanks,
Monika

EPF Deduction Guidelines

First of all, you should be aware that the deduction of EPF should be done on Basic + DA + Food Conc. (if any). Then, the basic wage should not be kept less than the minimum wages of the state. Thirdly, on wages up to Rs. 6,500/-, the deduction of EPF is a must. Fourthly, once a member becomes a member of EPFO, he can't be exempted as the salary hike is above the ceiling. It solely depends on the company whether they pay EPF accumulation on the actual basic or up to the ceiling of Rs. 6,500/-.

Last but not least, the ceiling of Rs. 6,500/- is only for EPS & EDLI.

Thanks & Regards,

Sumit Kumar Saxena

Dear Sumit, thanks for sharing. I request you to share the reference of the ACT or Judgment as I need to cite it with my seniors. Is it mandatory that if PF was deducted in the previous organization, we have to deduct it here?

I have noticed in many companies that when Basic + DA exceeds 6500, to avoid PF deduction, the employer will have new joiners fill out Form 11. Is it in accordance with the law that if we have Form 11 for all these employees, there is no obligation to deduct PF?

Please revert.

Thanks & Regards