The mandatory deduction of PF from a salary of more than 15000 depends on Two cases. In the first case, if the employee’s starting salary(basic wage + DA) is above 15000 during joining itself then it is not mandatory to deduct PF.
In the second case if the salary of the employees increases more than 15000 Rs due to salary hike then that employee should have to continue in the EPF scheme, but PF will be calculated on 15000 only.
Under section 26 A of the employee provident fund act 1952 whenever the monthly salary of an employee exceeds 150000 Rs, still employer can calculate PF contributions up to 15000 only.
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 additonal PF contribution then you can pay that amount under voluntary PF contribution.
What is the maximum amount of PF deduction ?
The maximum amount of PF deduction is 1800 Rs, it is calculated on 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 balance 8.33% goes to pension account of the employee.
Is PF deducted from Gross salary?
No, PF is always calculated on basic wage + dearness allowances. If 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.