Confused About PF Deductions? Seeking Clarity on Mandatory vs. Optional Rules

Clarification on PF Deduction

There is a huge confusion regarding PF deduction as we have received mixed suggestions from PF consultants and the HR network. Some say that PF is mandatory for all, irrespective of the PF slab, while others suggest that PF is optional for employees whose basic salary exceeds the PF slab (i.e., Rs. 6500/15000 as per the new revision, which is yet to be effected). Can you please clarify this?

Thanks in advance!

Regards,
David.

Understanding the Pension Fund and Provident Fund

What is the pension fund of ₹541 in our PF? I can see that we should be eligible for it at the age of 58+. How much do we get after that age?

If a person dies suddenly after 10 years of his/her service, will the nominee get the pension fund and Provident Fund? If so, how long will the nominee receive the pension? Because almost ₹2 Lakhs go into the pension fund during the tenure. What are the benefits for him/her or their nominees?

Can anyone please explain this to me because I don't have an idea about it.

Thanks in advance.

Regards,
Vellanki

Please read sections 2(f), 26, 26A, 29, and 30 of the Provident Fund Scheme, and paragraphs 3, 4, 6, and 9 to 16 of the Pension Scheme. It is difficult to explain all of this in the forum.

Regards,
Varghese Mathew
[Phone Number Removed For Privacy Reasons]

To the best of my knowledge, the PF deduction and contribution is mandatory up to the slab of 6500 (basic salary). Beyond that, it is up to the organization to decide if they wish to contribute.

Hope this information is helpful.

Regards,
Vivek Sharma

PF and Its Mandatory Nature

PF is mandatory. It is not the choice of the employer or employee to decide on it. If it were not mandatory, then the whole company could say 'NO' to EPF. Is this allowed under the Social Security Act? Well, then we could open a recurring deposit account in a nationalized bank.

Understanding PF Wages and Contributions

Working on usual terms, if the PF wages ceiling is 15,000, then the EPS share is 541, and the remaining 1,259 is the EPF share. Let's wait for the official circular from EPFO for the next financial year. It is too early to get confused.

Regards,
Chandru

As and when the PF ceiling is raised to 15,000, it is most likely that the EPS ceiling will also be raised to 15,000. This means that the EPS contribution will be 8% of 15,000 plus the government contribution, which is also under revision to around 1.76% from 1.16%. The end result will be a higher pension because the pension is a function of the last drawn salary (average of the last 12 months), but there will be a higher outgo from employees.

Shri Chandrasekar rightly said that PF contribution has to be deposited by the employer even after Rs. 6500/-; it's not at the employer's discretion, it is mandatory and cannot be avoided. Yes, it's the employer's choice to follow the maximum ceiling, i.e., Rs. 6500/-, for depositing PF contribution to avoid more financial burden on him.

I would like to request all fellow members to please verify to the best of your knowledge before posting a reply. It may only create more confusion.

Or Cite HR administration may also keep a check on all the replies before posting them immediately.

Regards,
Manish Bali

Unless notification comes from the EPF department regarding the increased limit for EPF of Rs. 15,000, it is very difficult to determine to whom and how it would be applicable.

Clarification on PF Deduction

PF is mandatory for all employees having wages not less than Rs. 6500/- per month in the covered organization as per the Employee Provident Fund Act, 1956.

Regards,

The employee has the option to contribute to the EPF if their basic pay plus D.A. exceeds 6,500. Those employees need to submit a request letter indicating their desire to have deductions made in the PF, and the employer will inform the PF office accordingly.

EPFO Coverage Update

The following lines are taken from a Times of India article on EPFO's latest news (2/2/2014): "At present, EPFO does not cover organized workers under its social sector schemes whose basic wages, including basic pay and dearness allowance, exceed Rs 6,500 at the time of joining service."

Thank you.

Can anyone clarify my doubts? Has any official notice been published by the government? If you have found any information about it, please share it with me, including the effective date.

Regards,
Elumalai
JBMAS, Hosur

Dear David,

Greetings for the day. No need to be confused.

Understanding EPF/EPS Deduction

First of all, one must know about the deduction of EPF/EPS accumulation. Deduction of EPF should be done on basic + DA + food conc. (if any), but mind it; this should not be less than the minimum wages defined by the state government from time to time.

Mandatory vs. Optional EPF Deduction

Secondly, as you mentioned about mandatory or optional, it must be noted that the basic ranges up to Rs. 6500/-. The deduction of EPF is mandatory, but once one becomes a member of EPF, he remains a member until his/her basic salary rises up to the mark. His/her accumulation should be fixed within the range i.e., Rs. 6500/- if his or her basic rises beyond this.

Awaiting New Notification

Thirdly, as far as Rs. 15,000/- is concerned, let's wait for the notification rather than jumping to conclusions based on newspapers/channels' assumptions. Hope this will clarify all your doubts.

Thanks & Regards,

Sumit Kumar Saxena

Dear David, Greetings for the day. In addition to my above comment, I forgot to mention that the ceiling of Rs. 6500/- is mandatory for the calculation of EPS contribution and EDLI. For EPF, it solely depends on the employer whether to consider the actual basic or limit it up to the ceiling. I hope this clarification resolves all your doubts.

Thanks and Regards,
Sumit Kumar Saxena

Please don't be impatient. It is too early to discuss a topic (revised ceiling) until an official circular is received. By the way, I never discuss a topic with assumptions or insufficient knowledge. Moreover, my reply has been straightforward and not zig-zag.

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1. Never post a question without searching this site; the reply could be available elsewhere in the discussion banner.
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4. Never reply solely for the sake of receiving 'Likes/Appreciations.'
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By now, you would have understood why many senior contributors have not participated in the thread (due to the lack of a complete picture).

Regards,
Chandru