Is It Mandatory to Deduct PF from Salary More than 15000?

Under section 26 A of the employee provident fund act 1952, if your monthly basic wage is above 15,000 Rs then the employer can calculate PF on 15000 Rs only.

For example, if your basic wage is 20,000 Rs then your employer will calculate PF only on 15,000 Rs i.e 12% of 15,000 is 1800 Rs that is employer PF contribution.

But employees can deposit PF contribution even above 15,000 Rs basic wage as per their wish, but your employer can limit their contribution to 15,000 basic wage only. Employers will separate these amounts in the EPF ECR file, and make the payments every month.

Can employee pay PF for a salary more than 15000

Yes, employees can pay PF for a salary of more than 15000 Rs, in that case, 12% of their salary will be paid towards employee PF contribution, which will come under voluntary PF contribution.

But your employer doesn’t have any obligation to calculate their contribution on increased salary, they can limit their contribution to 15000 pay only.

The benefit of paying PF on more than 15000 Salary

The main benefit is the interest rate, at present EPF is providing an interest rate of 8.50% it is better than bank interest rates. If you are a conservative investor and don’t want to risk your money by investing in the stock market then investing your money in EPF is one of the best options.

Is it mandatory to deduct pf from salary more than 25000?

If your starting salary is above 25000 Rs then it is not mandatory to deduct PF.  But if you are already a member of EPF and your monthly salary increases to above 25000 Rs then you have to continue your PF contribution, but PF will be calculated on a limit 0f 15000 salary only.

If you want to pay additional PF contribution then you can pay that amount under voluntary PF contribution.

FAQs

What is the maximum amount of PF deduction?

The maximum amount of PF deduction is 1800 Rs, it is calculated on a maximum PF contribution limit of 15000 Rs.

How much EPF is deducted?

12% of employee basic wage + dearness allowances will be paid as a monthly contribution towards PF and at the same time employer will also pay another 12% PF contribution. In which 3.67% goes to PF and the balance 8.33% goes to the pension account of the employee.

Is PF deducted from Gross salary?

No, PF is always calculated on basic wage + dearness allowances. If the company doesn’t pay dearness allowances then PF is calculated only on the basic wage.

Is PF mandatory for every organization?

Every organization which employees 20 or above 20 employees should register their establishment under the employee provident fund act 1952.

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