P.F. Deduction

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

27 April 2010 Dear All,

If the salary of an employee got increased and after increment his basic wages exceeds Rs. 6500/- whether it will stiil be mandtaory to deduct his P.F. (if before increment he is a member of P.F. deducted employees.)

Ram Avtar Singh online

Ram Avtar Singh online

(Expert)
Follow

27 April 2010 if salary increase from 6500 then PF applicable on employee on new salary.

Employer contribution up to 6500/=

above 6500/= employer in not bounded by law to deduct his contribution and deposit in employee account. he will deduct up to 6500/- only.

Querist : Anonymous

Querist : Anonymous (Querist)

07 May 2010 Dear Mr. Ram Avtaar, Thank you for replying. But My question is whether P.F. deduction will still be mandatory after increment.

Upgrade to CAclubindia Pro. Subscribe Now!

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
Follow

09 August 2024 ### PF Deduction and Basic Wage Threshold

Under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, the rules regarding Provident Fund (PF) contributions are as follows:

1. **PF Membership Continuity**:
- If an employee is already a member of the Provident Fund (PF) scheme, the PF contributions will continue even if their basic wages exceed ₹6,500 per month after an increment. This is because once an employee is a member of the PF scheme, they are entitled to continue contributing to the PF even if their salary exceeds the threshold.

2. **Wage Limit for New Members**:
- The wage ceiling for mandatory PF contributions is ₹15,000 per month. If an employee’s basic wages are below ₹15,000, they must be enrolled in the PF scheme. However, if an employee’s basic wages exceed ₹15,000 per month, the employer is not mandated to enroll them in the PF scheme for new members.

### For Existing PF Members:

- **Mandatory Deduction**:
- If the employee was already a member of the PF scheme before the increment and their basic salary now exceeds ₹6,500, the PF contributions must continue as long as their salary remains below ₹15,000.
- The PF contributions will be calculated based on the current basic salary.

- **Contribution Calculation**:
- Both the employer and employee contribute a percentage of the basic salary (usually 12% of the basic + dearness allowance). Contributions will continue on the increased basic wage, provided the employee’s salary is below ₹15,000.

### Key Points:

- **Existing Members**: If an employee’s basic salary has increased beyond ₹6,500, their PF contributions will continue if they were already a PF member before the increment. The contribution should be recalculated based on the new basic salary.

- **New Members**: If the basic salary of a new employee is above ₹15,000, PF contribution is not mandatory, but the employee can opt for PF membership voluntarily.

- **Documentation**: It is important to update the employee’s PF records to reflect the new salary and ensure the correct amount is being contributed.

- **Compliance**: Regularly check compliance with PF regulations and any updates issued by the Employees’ Provident Fund Organisation (EPFO) to ensure adherence to legal requirements.

In summary, PF contributions will remain mandatory for existing members even if their salary exceeds ₹6,500, as long as their salary is below ₹15,000.