Understanding PF Deductions: Salary Limits and Contribution Period for New Employees

Minimum and Maximum Salary Range for PF Deduction

What is the minimum and maximum salary range for the deduction of PF?

Contribution Period of PF for New Employees

What is the contribution period of PF when a new employee joins the organization, and his UAN needs to be created?

The monthly salary up to Rs. 15,000 is the maximum limit for PF. Employers and employees may consider a limit higher than Rs. 15,000. The deduction of PF is based on Basic + DA + Retaining Allowance. Once your PF is deducted, the employer cannot reduce the wages.

Regards, Skumar

I am not sure of your query; next time, please write it clearly. However, based on what I understand you are asking:

Minimum Salary for PF Deduction

There is no minimum salary for PF. PF is to be deducted even if the employee earns ₹1. However, you need to pay the minimum wages as per the state notification under the Minimum Wages Act.

PF Contribution on High Salaries

Once PF is paid for an employee, it continues to be paid irrespective of how high his salary goes. However, once his salary crosses ₹15,000, you need to pay 12% of ₹15,000 and not on his full salary.

(Salary is Basic + All Allowances other than HRA, Overtime, and allowances paid specifically to defray the actual cost of working at a particular place)

Exemption for New Employees

The only exception is where the employee joins a company with a starting salary of over ₹15,000 and does not have an existing PF account from previous employments. In this case, he can be considered exempt and can opt out of PF.