PF Dilemma: Can We Exempt Employees Earning Over 25000 from Deductions?

Hello everyone.

I would like help from everyone regarding my question. My question is, if an employee's salary is more than 25000, can we deduct his PF according to PF rules, or can we show him as an exempted employee?

Please reply to my question promptly.

Employers have to offer the EPF to employees drawing a salary over 15,000. The employee can either contribute on the full basic + DA or contribute up to the ceiling limit of 15,000. However, it is up to the employee to accept or refuse the offer. The employer must ask for the same, and if the offer is refused, they should keep the refusal in writing for employer safeguard.

You didn't mention whether he is a new joiner or an existing employee. Either way, if the employee doesn't withdraw his previous PF account, i.e., his previous PF account still exists (or he is already a member of PF), then he must contribute to PF. He cannot refuse. Consider his PF salary as Rs. 15,000 and process the PF. His maximum deduction will be Rs. 1,800.

Encouraging PF Enrollment

First of all, insist that employees opt for PF. Explain to them the benefits. Try to convince them that it is not an expense but only beneficial. Also, for higher salary levels, the contribution to PF is tax-exempted.

An employee presently contributing PF on 20,000 and wishes to contribute PF now on 15,000. The employee has submitted an application to the employer requesting to restructure his salary accordingly. Is it permissible?

Yes. Since he is willing to contribute only $15,000, his salary may be restructured accordingly.