Can Employees Opt Out of PF if Their Salary Exceeds a Certain Amount?

Hi,

I just wanted to know if it is possible for an employee to opt out of PF if his/her salary/basic pay exceeds a certain amount. Or is it mandatory for everyone to be enrolled under PF irrespective of the salary they receive.

Hi Shoba,

According to me, if the basic salary of anyone is more than Rs 6500, then he can opt out of the PF, meaning it will not be mandatory for anyone to contribute to the PF. For your reference, I have attached a link which contains the discussion on the same topic.

Regards,
Amith R.

Thanks a lot for your quick response. I have one more clarification. In case a person has enrolled under PF, is it still possible to opt out of it? I have just joined a company recently. I have still not yet filled out my PF form. However, deductions towards PF have been made for the last 3 months.

Hi Shobha,

It is true that if the basic salary is more than Rs. 6,500/-, the person can opt out of the PF. But there is a condition. If the person was earlier paying the PF and changes companies, he/she has to continue paying the PF. If there is a gap in service for more than 6 months, then he/she can opt out of the PF option. PF falls under 80C savings, and you have to save 1L, which will come in handy.

Suneel.

Legal position: To opt out of PF membership, two conditions are applicable:

a) Employee's basic should exceed Rs. 6500/- per month.

b) He/She should not have existing PF membership at the time of joining the new company. In other words, he/she should have withdrawn PF from the earlier company before joining the new company. This position is governed by the definition of an excluded employee under para 2(f) of the EPF & MP Scheme 1952.

Paresh Pathak's email queries can be sent to pmrppathak@yahoo.com.

Dear All,

Please update your legal knowledge. For Provident Fund (PF), there must be an employer-employee relationship. Even if an employee is drawing a basic salary of more than Rs 6,500 per month, PF contributions are compulsory for them.

The upper limit for the basic salary is Rs 6,500 per month. If an employee's basic salary exceeds Rs 6,500, the employer has the option to pay PF contributions based on Rs 6,500 only.

For example, if your basic salary is Rs 10,000, the employer can choose to contribute based on Rs 6,500 only. In that case, there is no need to pay on the actual basic salary.

Regards,
Nitin Nikam

Hi all,

The PF knowledge is really helpful. Can someone give me some ideas about minimum wages that should be paid to the employees?

Regards,
Rajdeep

Hi Nitin,

Just in case if the employer is showing in CTC as giving the same PF contribution as we, the employees (for basic more than 6500rs), but actually only putting money in the PF account considering basic as 6500/- per month, how can this be identified?

Thanks in advance.

Hi,

How to file for the Exemption of PF since I don't know which form and what the process to file for Exemption of PF - my basic is more than 6500. Now, it has been 2 years as an employee in a company. I want to file for PF exemption.

Waiting for a reply.

With Regards,
Syed Haji :icon1: