Can an Employee Contribute ₹20,000 to PF if Their Basic Salary is ₹26,000?

Dear Senior,

Greetings. My query is if an employee's basic salary is ₹26,000/- per month and they want to contribute ₹20,000/- per month to PF wages, is it possible?

Understanding PF Contribution Limits

As per my understanding, if the basic salary is greater than ₹6,500/- per month, then it is possible, but I am not entirely clear. If it is not possible, kindly refer to the law.

Best Regards,
Manish

First, let me know your company policy. Some companies will deduct the PF at 12% even if the basic + DA is more than 6,500/- (the same amount will be added by the employer). On the other hand, some companies deduct only for the slab level, i.e., 780/- (on 6,500 max), even if the basic + DA is more than 6,500/-. If any employee wants to contribute more than the slab level, they can do so through the VPF process. Please check under the VPF process.

Regards,
Viswanadh

I am providing below Para 26(6) verbatim and requesting the members to respond to your query in light of it.

"Para 26(6) of the Provident Fund Scheme"

"Notwithstanding anything contained in this para, an officer not below the rank of APFC may, on the joint written request of any employee to whom this scheme applies and his employer, enroll such employee as a member or allow him to contribute more than Rs. 6500 of his pay per month if he is already a member of the Fund. Thereupon, such employee shall be entitled to the benefits and subject to the conditions of the Fund, provided that the employer gives a written undertaking that he shall pay the administrative charges payable and comply with all statutory provisions in respect of such employee."

Members of the forum respond without referring to the provisions of the Law, except two or three. Therefore, I decided to provide the relevant provision.

In addition to what is stated by others:

While an employee can subscribe (it's called voluntary subscription) to Rs. 780/-, being 12% of Rs. 6500/-, the maximum salary covered for PF, the employer cannot be compelled to contribute an equivalent amount or match the subscription of the employee over and above Rs. 780/-. In other words, the employer will restrict their contribution to 12% of Rs. 6500/- only.

Regards,
Kumar.s.

Thank you very much, Keshav, for your guidance. As per Para 26 (6) & Para 26A of EPF, the employer's contribution to PF is limited to 12% of Rs. 6500/-, and the employer is not liable to contribute on the wages exceeding Rs. 6500/- per month. The employee will contribute based on their higher salary exceeding Rs. 6500/-, but prior permission is required from not below the rank of APFC, and an undertaking has to be given by the employer that they will continue to pay the administrative charges on such higher wages.

Thanks to all the members for sharing their views.

Regards,
Manish

An employee can voluntarily contribute more than ₹780 per month to their PF account, but the employer cannot be compelled to pay more than ₹780 per month.

Regards,
Dr. Prasad Bhanage

I think they have taken both Basic & Special allowance for PF. For proper clarification, speak to your HR, then you will come to know what policies they are following for your company.

Regards,
Neesha