Understanding PF Deductions: Are Those Earning Under ₹90,000 Eligible?

Could you please provide me with information on the eligibility for PF deductions? I am inquiring about individuals with an annual income of less than ₹90,000 per annum. Are they the only ones eligible for PF deductions? Kindly furnish me with the necessary details.

Thank you.

If any company is registered with the PF organization, it must deduct 12% of the employee's share from the employee's basic salary. There is no minimum or maximum limit for PF deduction on the basic salary. There are two methods to calculate PF on an employee's salary:

Method 1: Fixed Basic Salary for Calculation

1. Taking the basic salary as ₹6,500/- for all employees whose basic is more than ₹6,500/-. If an employee's basic is less than ₹6,500, in this case, the actual basic should be considered.

Example: If the basic salary of an employee is ₹4,500, then the calculation of PF is ₹4,500 * 12% (basic is less than ₹6,500/-). If the basic salary of an employee is ₹10,500, then the calculation of PF is ₹6,500 * 12% (basic is more than ₹6,500/-).

Method 2: Actual Basic Salary for Calculation

2. Take the actual basic and calculate 12% on that (whatever the basic is, less than or more than ₹6,500, use the actual base as in the first example above).

Voluntary Provident Fund (VPF) Option

Apart from PF, there is one more option for employees, which is Voluntary PF. This means, in addition to the regular PF deduction, the employee can opt for VPF according to their wish. For VPF, the minimum percentage is 12% and the maximum is 80% of the basic salary. Most employees choose this option to avail of tax relief, which is highly beneficial to them.

Thank you.

Good afternoon, kindly inform me if employees cross their basic salary of ₹6,500/-, whether we will deduct PF or not.

There is no limit to calculate PF; whatever the employee's basic salary is, PF will be calculated based on that amount. Whether it is less than 6500 or more than 6500, PF should be calculated accordingly.

In case the salary is 90,000 per annum and if the company has more than 20 employees, it is mandatory for the employee to contribute towards PF. The monthly contribution will be 7,500. PF is mandatory if the basic salary is less than 6,500 per month. PF contribution is 12% of the basic salary.

Hope this helps.