Understanding PF Coverage: Is a Basic Salary Over 15,001 Eligible and Can Employer Contributions Be Reduced?

If the basic salary is above 15,001, does it come under PF coverage? Also, can the employer's PF contribution be voluntarily reduced if it is currently above 1,800?

EPF Contribution Guidelines for Employees with Basic Salary Above 15,000

If the basic salary of an employee is more than 15,000 per month, they will be classified as an exempted employee, and their contribution may be restricted to 1,800 per month. In case their basic salary falls below 15,000, you need to remit EPF contribution at 12%.

Corporate Practices on EPF Contributions

In some large corporate companies, the EPF contribution is not restricted to 15,000. Instead, they contribute based on the actual basic salary, which may exceed 15,000 throughout their service. The management also shares an equal amount of contribution, which not only boosts morale within the company but also establishes a good reputation in the industry.

It is always a bad practice to give partial information as it may result in you getting a wrong answer.

Exemption from PF

An employee can be exempt from PF only if they do not have an existing PF account (current or from a previous employer) and their starting salary when they join the organization is above ₹15,000. Both conditions must be fulfilled simultaneously. Therefore, if you join an organization with a lower salary but it increases to ₹15,000 later, you will need to continue with PF. Similarly, if the new joiner has an existing PF account, then PF continues.

Voluntary Contribution

In the case of voluntary contribution, either party can reduce their contribution at any time. It is not necessary that the other party should also stop or reduce simultaneously.

EPF Enrollment for Freshers and Existing Members

If an employee is a fresher, he can opt out of the EPF if his EPF salary is more than ₹15,000. It is not compulsory to be enrolled under the EPF Scheme if he is a fresher and has an EPF salary exceeding ₹15,000.

If he is already a member of the EPF scheme, he must be compulsorily enrolled in the new company as well, even if his EPF salary is more than ₹15,000. You can limit your EPF salary to ₹15,000 as well, even if you are earning more than that.