Confused About PF Deduction Limits? Let's Clear Up the Mystery Together

Good Evening Everybody, I request all of you to kindly clear this doubt of mine regarding PF deduction. As we all know, for calculation purposes, the upper limit of Basic and DA is 6500/-. However, I have noticed that on paper or in the appointment letters, the calculation is 12% of basic and the basic can be any amount. Additionally, the in-hand salary is as per deductions of the appointment letter.

Understanding PF Deduction Discrepancies

So, what can I understand from this? Is there something hidden, or did I miss out on something? I could not find the solution to this query in the previous discussions. Please educate me on this.

Understanding PF Contribution Limits

The contribution of employees and employers can be statutorily limited to 12% of the basic or DA, or both. However, employees can voluntarily contribute 12% of the basic + DA (or basic alone if DA is not paid) in excess of ₹6500/-. The employer is at liberty to restrict their contribution to ₹6500/- or on actual wages.

Regards,
Varghese Mathew

If the gross pay is more than Rs. 6500/-, PF will not be applicable. Where is the restriction in this question? You need not pay even on Rs. 6500/-. To attract employees, you can opt for PF. I mean to say, if Rs. 6501/- is paid as salary, that employee will not be subject to PF.

Please correct me.

Regards,
Hrkpati

Once you are enrolled as a member in the PF of your organization, PF on Basic + DA will be deducted at 12%. A similar amount (i.e., 12%) will also be added as an employer contribution to PF. However, out of this 12% of employer contribution, a maximum of Rs.541/- (i.e., 8.33% of Rs.6500/-) will go to the employee pension fund, and the remaining amount will be added to the employee's PF contribution. Even though there is a baseline of Rs.6500/- fixed by the PF authorities for the deduction of PF, once you are a member of the scheme, you cannot opt out of this after crossing the Rs.6500/- base. Hope this clarifies things for you.

Regards,
Balakrishnan

There is no law that states once the salary is above Rs 6500/- per month, PF need not be deducted. An individual with a salary above 6500/- shall continue as a PF member if they were already an EPF member and have not withdrawn their PF accumulation.

Thank you.

Thank you, everyone, for your replies. However, there is one more doubt on my mind. Since I worked for a production firm where mostly blue-collar workers were employed, I want to clarify whether we need to inform the employees about deducting 12% of their basic salary (even if it exceeds $6500) as mandated by law, or if it can be decided by the company, given that they may not be aware of this $6500 threshold, even though we have consistently deducted 12% from any basic salary.

Thanks,

Is it possible for an employee to make a voluntary contribution to the PF account from their salary, exceeding the basic Rs. 6500/-? For example, contributing Rs. 780 + Rs. 1020 = Rs. 1800, while the employer's contribution remains restricted to no more than Rs. 780/-. Please explain...

Dear Seniors, I need help regarding the withdrawal of the Pension Amount. It is required to have a minimum of 6 months of service for withdrawal.

Query on Service Duration for Pension Withdrawal

My query is whether the 6 months should be counted from the date of filing Form 2 Nomination and submitting it to the PF Department, or from the contributions deducted from the salary and remitted to the PF Account maintained with SBI.

Regards,
Azim Charania

Query Regarding FORM 10C Pension Amount

My query is regarding FORM 10C Pension Amount. In many cases within our establishment, the employee PF authority returns the Form 10C with remarks of less than 6 months of service. In this context, I have the following query:

Does the 6 months have to be counted from the date of filing Form 2 Nomination & submitted to the PF Department, or from the contributions deducted from the salary & remitted to the PF Account maintained with SBI?

Kindly revert.

Regards,
Azim Charania