PF celling limit is applicable on gross or basic salary?

Hello,

One of my friend is earning around 17000 monthly and her basic is less than 15000. Even though her basic + da is less than 15000, her company is not deducting her PF. They are saying that it is optional for employees earning more than 15000 gross monthly.

May I know is this correct? As our company is registering for PF now and we have many employees who might come under PF.

So PF celling limit is applicable on Gross or basic salary?

Kindly provide your feedback on this.

Thank You.

EPF is applicable to those employees whose salary at the time of joining does not exceed Rs 15000. Here two things are required to be verified. One salary means PF qualifying salary. That is basic salary and Dearness allowance. Basic salary means total salary as per contract of employment but excluding any house rent allowance. Allowances paid to all employees universally across the company should be considered as part of basic salary only. Therefore, if the Basic and DA exceeds Rs 15000 the said employee may be excluded from coverage of PF. Now coming to the second thing, if the employee joining newly is offered a salary of more than Rs 15000 is an existing member of PF, that is to say, he had a PF membership with his previous employment, then he should be given PF in your establishment also even though his salary exceeds Rs 15000.

Employer can restrict the payment of contribution to 12% of Rs 15000.

Salary for the purpose of contribution should be the salary for deciding whether one is outside the purview of EPF Act or not. That is, if the employer takes only the basic wages for contribution, then for excluding an employee from the coverage of PF also the same Basic pay should be considered. Therefore, if in the instant case, the employer has been deducting PF on basic salary only, then he should get PF because his basic salary is less than Rs 15000.