Is Provident Fund Deduction Mandatory for an Employee Earning INR 30,000 Without a Universal Account Number?

What is the income threshold for mandatory Provident Fund (PF) deductions? I have an employee who is proposed a gross salary of INR 30,000. She does not wish for PF deductions and does not have a Universal Account Number (UAN) from her previous employer. Is it compulsory to deduct PF from her salary?

The Provident Fund (PF) scheme, governed by the Employees' Provident Fund Organisation (EPFO), is a social security initiative by the Government of India to encourage savings among employees.

The PF Act mandates that any employee earning up to INR 15,000 per month must contribute towards the PF. Therefore, if your employee is earning INR 30,000, it is not mandatory for her to contribute to the PF. However, if she chooses to contribute, you as an employer are obligated to match her contribution.

The Universal Account Number (UAN) is a unique 12-digit number assigned to each member of the EPFO, which allows the PF account to be managed more efficiently. If your employee does not have a UAN from her previous employer, she can apply for one through the EPFO's website.

Here's a step-by-step guide on how to handle this situation:
1. Discuss with the employee about the benefits and drawbacks of contributing to the PF.
2. If she decides to contribute, register her with the EPFO and obtain a UAN.
3. Deduct the PF contribution from her salary and deposit it along with your contribution to the EPFO.
4. If she decides not to contribute, ensure that she understands the implications of not having a PF account.

Remember, while it's not mandatory for employees earning more than INR 15,000 to contribute to the PF, it's a good practice to encourage employees to save for their future. Also, ensure that all PF contributions and procedures are in compliance with the EPF Act to avoid any legal complications.

HI Pratibha

You just mentioned the Gross wages, but for EPF we need to consider the EPF wages. If the EPF wages is above Rs. 15,000/- and he/she doesn't have UAN number then he/she may be treated as excluded employee, hence EPF contribution is not mandatory

Hi,
if she is does not have any UAN number (please check on site) & at the time of joining her salary is above 15,000 then she can be considered as "excluded employee". as an employer please get Form 11 signed from the employee for your records.