Can Small Companies Voluntarily Start EPF and Limit Contributions for High Earners?

I would appreciate it if someone could advise whether a company with fewer than 20 employees, where both the employer and employees are willing to start EPF in the organization, can do so.

Secondly, for those employees with a basic salary scale above 10k per month, can the employer limit the contribution to 10k only?

Regards,
JD

With reference to your query on the above subject, you can register your organization voluntarily and also cover your employees under the EPF Act-1952 Rules if the strength is less than 20.

Steps to Register Under EPF Act-1952

For that, you need to do the following:

1. First of all, your company has to be registered under section 1(4) of the EPF Act.
2. You need to apply by filling Form - 1 and other documents like the number of employee details (including their salary breakdowns, date of joining, registration certificate of the company, etc.) with consent from the employer as well as from the employees, and submit the same to RPFO.
3. Once you get the Establishment code, you can start the monthly contribution process.

Thanks,

R. Dileep Kumar

Respected JD, good morning. The first question was answered in the above post that voluntarily you can register into EPF even though you have less than 20 employees. Once you are registered, in the future, even though you have only 1 employee, you have to pay EPF; you can't drop it in the middle until the company closes.

Second Query: As per my experience, the limit of the basic salary as per EPF was Rs 6500/- (we are filing monthly returns with the 6500/- limit); it's not 10,000 (10k).

Here also, the company can go with the statutory limit. Otherwise, if the company and employees want to contribute more, they can fix the limit as per the company's different basic amounts, which may exceed 6500 to an unlimited basic salary amount.

Thanks for advising on the detailed procedure to be followed. Can you also shed some light on what unorganized sector PF contribution companies are? Do they have a different taxation system for PF contributions?

Thank you for correcting me on the statutory limit. If you have any insights into the PF taxation system, I would appreciate your reply on the same.

Regards,
JD

I would also like to know, can the contributions to EPF vary from month to month? For example, if an employee is capable of contributing 20% of his basic pay + DA at the beginning of the year, but by the end of the year, he can only contribute 12%, is that possible?

Regards,
JD

Mr. JD, we can't say that it's not possible. Generally, companies, and mostly PF officers, won't invite that much work. In the act, it's not written anywhere. With a letter, you can do the above. Again, it's the nature of the PF person (Assistant/Commissioner) who is designated to your company code.