Is It Right to Stop PF Deductions After a Salary Increase from Rs 5000 to Rs 7500?

Hello, can anyone clarify whether PF needs to be deducted for an employee whose salary increased from Rs 5000 to Rs 7500? PF was deducted from his salary when it was Rs 5000. Now, his PF is not being deducted. Is this correct? What is the remedial measure?

PF Deduction on Basic Salary

PF is deducting 12% from the employee's basic salary. If the basic salary exceeds ₹6,500, the management fixes the deduction at ₹780.

An employee who is once covered by PF should continue to be covered irrespective of any hike in their salary. Therefore, your act of not deducting PF when their salary increased to Rs 7000 is incorrect. Of course, you can restrict the contribution to 12% of Rs 6500 and need not contribute 12% of Rs 7000, but continued coverage is mandatory.

Regards,
Madhu.T.K

PF Deduction After Salary Hike

Once a covered employee continues with the PF deduction, it will remain irrespective of a hike in the salary. Yes, the deduction could be made on the ceiling amount of Rs. 6500/-, i.e., Rs. 780/-. However, it should not vary from person to person. All employees' deductions should be at Rs. 6500/-. A hike in salary will not affect PF deduction once it is covered. Non-deduction is illegal and will be recovered by PF officials with interest and damages.

Regards,
Pramod

Once an employee is a member of PF in an organization, despite a hike in salary (above Rs. 6500/- basic), the employee will continue to remain under the PF Act. As explained by Mr. Pramod Pandey and Mr. Madhu, non-deduction of PF is illegal. The PF authorities shall treat this as non-compliance.

Dear Honorable Member, most of the members have rightly advised you. The Employees' Provident Fund Scheme, 1952 stipulates that where the monthly pay of any member of PF exceeds Rs. 6500 per month, the contribution payable by him and in respect of the employer shall be limited to the amounts payable on a monthly pay of Rs. 6500, including dearness allowances, retaining allowance (if any), and cash value of food concession.

Regards,
BS Kalsi
New Member

Mandatory PF Deduction

It's mandatory to deduct the PF from the salary. The limit is ₹6,500 per month, including the Special Allowance. You can deduct ₹780 on a ₹6,500 salary. If the salary increases from ₹6,500, then it depends on the employer. If the employer wants to deduct excess PF on the increased salary, he can do so. However, you can't stop the deduction of PF. Legally, this is wrong.

Regards

As per the PF Act, the deduction is not mandatory if an employee's salary exceeds ₹6,500/-. The employer is not liable to deduct or submit PF to the organization for amounts greater than ₹6,500/-.

Regards,
Santosh Choudhary

It is mandatory to deduct his PF even if his salary is increased to more than 6500 since he has been a member of EPF. We can exempt an employee only when his basic salary at the time of joining is more than 6500. However, if his salary at the time of joining is less than 6500, he becomes a member, and even after it increases to more than 6500, he still continues to be a member, and we cannot exempt him.

Some other information about PF is attached.

Regards,

Yes, no doubt, it is compulsory to deduct his PF even if his salary is increased more than $6,500.

It can't be overruled if an employee has been registered for EPF until he/she finishes the job at the same company. The limit can be fixed up to 12% of 6500 (salary maximum limit for EPF). Please draft a policy with your management if your organization really wants to deduct/provide 12% EPF of the total salary.