Is It Mandatory to Deduct PF for Faculty Earning Over 6,500? Seeking Clarity

Hi, I am heading a college and receiving frequent notices from the PF department to enroll my employees in the PF fund. The majority of my faculties are earning 7,500 or more per month. Now, according to the act, is it compulsory to deduct the amount from their salary even though they are earning more than 6,500? Do I have any option to not deduct PF from their salaries?

Rachana

Dear Rachna,

If you have more than 20 employees in your organization, then you must register it with the PF. Moreover, you have not clarified whether their gross salary is more than 6500/- or basic, as PF applies over the basic salary, and the ceiling is 6500/- basic salary per month.

Regards,
Amit Seth.

Hi Rachna,

I absolutely agree with Mr. Amit. However, it is not necessary to deduct PF from the salary exceeding Rs. 6,500/- (Basic only).

Regards,
Devender Kr. Sharma

Hi Amith,

As you have mentioned, if an establishment has more than 20 employees, then PF should be deducted. However, as per the law, there is no minimum or maximum ceiling on salary in the PF. For example, if an employee is drawing a salary of Rs. 6500, of which Rs. 2000 is basic, then 12% PF should be deducted on the basic amount. The same 12% has to be contributed by the employer. If an employee receives the remuneration in the form of salary, then the employer needs to deduct PF and also contribute. If the payment is made as a retainer fee or consultation fee, then there is no obligation of PF.

Regards,

J Udhay Attvar

Hi, herewith I am clarifying my previous question. Yes, I have a staff of more than 20. As earlier mentioned, most of them are earning beyond 7,500 per month. I am aware that PF can be deducted from basic+DA+retaining allowance (if any). However, in my case, 7,500 is a fixed salary given by the government only without any breakup. So, the amount is 7,500 fixed. Is it compulsory to deduct PF from employees on this amount? Also, please let me know according to which provision/section you are justifying your answer.

Regards,
Rachana

Dear Amith/Rancha,

Please find attached a detailed document for PF-employer contribution. As I mentioned earlier, if it is paid as a stipend/consolidated pay, then there is no need to deduct PF from the employee, and also no need to contribute. If it is given as salary, get the breakup like basic+DA+allowance and deduct 12% on basic+DA, with the employer contributing the same amount. The 6500 limit is only for the EPF (Employee Pension Fund), not for PF.

Dear Member,

The salary of your staff may be more than 6500/-. What is the salary structure that you have taken into account? Only Basic+DA is considered for EPF contribution. If the Basic and DA exceed 6,500/- per month, you can seek exemption under the EPF Act.

Murugavel.B Chennai.

Thank you for the response. As an employer, I have experience in deducting PF. Please advise me under which provision I am exempted, as I need to provide proof.

Rachana

Hi,

I agree with all the replies. It is not necessary to deduct PF if the employee's gross is more than Rs. 6500/-. It is the employee's wish, so you can get a letter from the employee stating that he doesn't want to deduct PF from his salary as his gross exceeds the limit.

Thanks,
Sridevi G

Hi,

I understand that in my case, PF is not necessary to cut down as per the replies. However, I need to prove this with some statutory proof. Kindly send a copy of the same provision.

Rachana

Hi,

Can anybody tell me what EDLI is all about and what deductions or paperwork an employer has to do?

Priyadarshini

Hi Priyadarshini,

Contribution. – (1) The contribution payable by the employer and the Central Government under sub-section(2) and sub-section(3) of section 6C of the Act, shall be calculated on the basis of the basic wages, dearness allowance (including the cash value of any food concession) and retaining allowance, if any, actually drawn during the whole month whether paid on daily, weekly, fortnightly or monthly basis:

Provided that where the monthly pay of an employee exceeds five thousand rupees, the contribution payable in respect of him by the employer and the Central Government shall be limited to the amounts payable on a monthly pay of five thousand rupees including dearness allowance, retaining allowance if any and cash value of food concession.

(2) Each contribution shall be calculated to the 3 nearest rupee, 50 paise or more to be counted as the next higher rupee and fraction of a rupee less than 50 paise to be ignored.

Mode of payment of contribution. – (1) The contribution by the employer shall be remitted by him together with administrative charges at such rate as the Central Government may fix from time to time under sub-section 4 of Section 6C of the Act, to the Insurance Fund within fifteen days of the close of every month by a separate bank draft or cheque or by remittance in cash in such manner as may be specified in this behalf by the Commissioner. The cost of remittance if any, shall be borne by the employer.

(2) It shall be the responsibility of the employer to pay the contribution payable by himself in respect of the employees directly employed by him and also in respect of the employees employed by or through a contractor.

(3) The Central Government shall credit its contribution to the Insurance Fund as soon as possible after the close of every financial year.

(4) The Commissioner shall deposit the bank draft or cheque received from the employers in the State Bank of India or any Bank specified in the First Schedule to the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970).

Dear Rachna,

All comments are right. In your case, I would suggest you to apply for a PF number and keep the Basic = 7500. Then automatically, all employees will be covered by the PF act and you also won't need to pay PF as all employees' basic is above 6500/-.

With Regards,
Nirmal Kumar Sahu