Can a Company Stop PF Contributions by Adjusting Salary? Seeking Detailed Guidance

Stopping PF Contribution for Existing Employee

It is possible to sign on from 11 with an existing employee who is already a member of the PF account. The company wants to stop his PF contribution by showing his basic salary as above 6500. Please tell me in detail.

Regards.

If the PF is being deducted presently, it cannot be stopped completely by filling in any form. However, it can be frozen based on a basic salary up to ₹6,500/-.

Dear members, The PF contribution cannot be restricted to Rs. 6500. On full allowable allowances, PF contribution should be made of 12% of both employer and employees' contributions. The ceiling of Rs. 6500 basic is for the EPS 95 fund. Nowadays, it is extended up to Rs. 15000 as well. Only Rs. 541 will go to the EPS 95 fund as of today. Whatever amount of 12% on basic plus other allowances. This concept is confusing all the employees.

Query on PF Contribution Limit Amendment

When the limit of Rs. 6,500/- is raised to Rs. 15,000/-, through which amendment in the PF Act does this occur? We have not come across such a development. Please enlighten us.

Regards

Let me give you the correct answer.

As stated by Shri. Dixon and Shri. Govind Singh, you cannot stop the contribution to PF under any circumstances. Once an employee is a member of PF, he remains a member of PF until the end.

Form 11 and Its Importance

Form 11 is a self-declaration by a new joiner about their status, whether they are a member or non-member of EPF/EPS in earlier employments. This form is to be filled out by every employee at the time of joining a PF-covered establishment. From this form, the establishment and the authority ascertain the eligibility criteria of the employee as a member of EPF/EPS.

If an employee states in Form 11 that they were a member of EPF/EPS in earlier employment and are still a member, in this case, the employee and the employer have no option but to cover them under EPF/EPS, even though their salary is more than Rs. 6500/- per month at joining the new employment.

If an employee is not a member of EPF/EPS in earlier employment or was not in employment earlier, and their salary is more than Rs. 6500/- per month in the new employment, they can choose not to contribute to EPF/EPS. They have to give an undertaking to this effect. Such a person is called an 'excluded employee' within the meaning of the Act.

If an employee is not a member of EPF/EPS in earlier employment or was not in employment earlier, and their salary is more than Rs. 6500/- per month in the new employment, but if they do not exercise their right to opt not to contribute to EPF/EPS and no undertaking is given by them to this effect, they have to be covered under EPF/EPS.

If an employee is not a member of EPS in earlier employment, they have to be kept out of EPS. This is because the Family Pension Scheme came into force in 1971. At that time, an option was given to then-existing members whether to go for this new scheme or not. Many then members opted not to go for it. The members who joined the PF after 1971 have no option but to become a member of this Scheme. This Scheme was converted into EPS in 1995.

I hope I have made it clear to you as well as to other viewers. Value additions are invited.

As per your query, Mr. Korgaonkar's answer is absolutely correct. Once any employee becomes a member of EPF/EPS, they must continue the contributions up to the maximum ceiling.

Regarding Form 11

Form 11 is only a declaration given by the employee to the employer about their previous membership in EPF/EPS.

Regards,
Srinivas B