Employee Salary Over Rs. 16,000: Is EPF Deduction Still Required?

Dear All,

If an employee's salary is more than (Basic) Rs. 16,000/-, do we need to deduct EPF contributions for him or not?

Regards,
Subramani

Dear Mr. Subramani, if an employee's basic salary is ₹16,000/-, it is their choice to opt for VPF (Voluntary Provident Fund). The actual fact is that if an employee's basic salary does not exceed ₹15,000/-, they can be considered for PF contribution (Employee and Employer).

What is VPF?

A VPF account is an extension of the Employees Provident Fund (EPF) account, which allows an employee to contribute a higher EPF amount voluntarily. The employer must contribute 12% of the employee’s basic salary (including Dearness Allowance) as their contribution towards the EPF. However, you can convert this account into a VPF by increasing your contribution beyond the mandatory 12%.

EPF Regulation for Salaries Above ₹15,000

Any basic salary exceeding ₹15,000/- must be exempted with Form 11 according to EPF regulations.

Benefits of VPF

There are many benefits in VPF, such as loans, tax-free status, high interest rates (close to 9%), investment fund opportunities, and safety.

Dear Subramani,

You have not mentioned whether the employee in question was earlier an EPF member in his previous employment. Could you please provide the date of leaving the previous job and the date of joining your establishment? Additionally, it would be helpful to know if the previous PF amount was withdrawn.

I also need clarification on the information furnished in Form No. 11 (New).

Thank you.