Should I Opt for PF Deduction with a High Salary? Seeking Advice and Reasons

Please suggest if the company provides an option to have PF deducted or not, what is the better choice. Since my basic pay is above 25,000 per month (which is above 6,500 per month), I have an option here. Please provide suggestions with reasons on why I should or should not have PF deducted.

Thanks

Regards

Everyone has to deduct the PF for the following reasons:
* To save tax
* To avail Pension benefits
* To avail EDLI benefits
* To earn interest

Regards,
Ashish

Provident fund is a component that is useful for every individual who is an employee and associated with any organization. It depends on the employer/organization whether they have the policy of deduction for PF contribution. Also, you must be aware if they have generated the respective PF account number against the deduction made on behalf of the employee.

I would suggest you go ahead with PF, which will act as one of the savings along with the opportunity to get a tax rebate if you fall in the tax bracket.

Regards,
Jeevan

Benefits of Joining EPF with a Higher Salary

In my view, becoming a member of EPF on a higher salary is beneficial for many reasons, such as:

- Compulsory saving
- Receiving a higher interest rate than market rates
- Becoming eligible for a pension after 10 years of service
- Enjoying the benefits of insurance without any contribution
- Securing a family pension in case of death, etc.

Moreover, one can also retrieve their money along with interest upon leaving the job. The present computerized system in EPFO is simplifying and expediting the procedures.

Regards,
Chandok AK
RPFC (Retd.)
www.akchandok.com

Benefits of Subscribing to P.F.

It is always beneficial to subscribe to P.F. even if you are not within the purview of the Act. Apart from the benefits of providing you a lump sum amount to tide over the hardship of sudden loss of income on retirement, it can provide you with a regular pension after retirement to secure your future as well as entitle you to insurance benefits.

It is very difficult to save from the salary in the modern lifestyle where the temptation for spending is irresistible with a new model with more attractive features surfacing in the market every day, either in mobiles, TVs, garments, goggles, or cars, not to speak of the race to compete with colleagues or neighbors to own these material possessions. Therefore, there needs to be a forced saving. The P.F. option provides that. This apart, you can get exemption from income tax on the P.F. contribution as well as on the lump-sum amount payable on retirement, which you would be paying otherwise since savings will be meager for a salary of Rs.25,000/- p.m. given the cost of accommodation, children's education in good schools, conveyance, medical care, and the daily food basket.

Hope this helps.

Regards,
B. Saikumar
In-House HR & IR Advisor

PF deduction is better for you because the employer has to contribute an extra amount to your PF account, which may be calculated based on the ceiling limit, i.e., Rs. 6,500/-. Additionally, the interest received on PF is exempted from income tax.

So, in my perception, the deduction of PF will be beneficial for you. Please let me know if you need further clarification or assistance.

Thank you.

Learned friends have provided you with appropriate suggestions and advice. You might need a more detailed account of PF, which is in the attached notes. Please use them to your advantage.

All the best.

Optional PF Deduction for High Earners

It's an optional choice for individuals with a basic salary exceeding 6,500 caps if the employee is not a previous subscriber. In the case of old subscribers, they have to make deductions regardless of basic caps.

Thank you.

PF Contribution Options for Employees

It's an optional choice for an individual with a basic salary exceeding 6,500 INR, if the employee is not an old subscriber. In the case of an old subscriber, he/she has to contribute regardless of the basic salary cap.

Regards

Our learned members, especially Mr. Kumar, have provided a very detailed explanation of the features of the EPF & MP Act. I would like to add further that even your VPF contributions will yield attractive, non-taxable returns in the range of 8.5% to 9.5%. In the normal course, if you consider an individual in a tax bracket of 30%, the returns would amount to 12% to 14%, which in the present scenario, is unimaginable. Unless you become a member of EPF, you cannot contribute to VPF and avail of this hidden benefit.

Hence, in short, opt for EPF and build a substantial corpus through VPF contributions with the highest returns.

Regards.

It is better for the employee to opt for PF deduction even though their salary exceeds Rs. 6,500. It is also beneficial to the company as the employer can relax without any burden in case of any unforeseen consequences to the employee during employment.

Regards

The Benefits of Provident Fund (PF)

PF is a very good option. Very few people are aware that it also provides life insurance.