Query on PF deduction

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Dipjyoti Majumdar

CA in service & CS. dipmaj@

2891 Points Posted on 25 April 2023

Respected Experts

Employee A is PF deducted @ 12% on basic salary Rs 20,000 = 2,400 per month. Now Mr. A wants his PF deduction @ 12% on Rs 15,000 = 1,800 per month as he says he is an 'excluded employee'. Is this possible ? What is the legal position under EPF Act.

Regards,

Replies (2)

Quick Summary

An employee earning £20,000 basic salary is having PF deducted at 12% (£2,400). They wish to reduce this to £1,800, claiming 'excluded employee' status. However, under current EPF regulations, simply earning above the old £15,000 statutory wage ceiling does not automatically make an employee excluded. The statutory wage ceiling for PF contributions has now increased to £25,000 per month. To reduce deductions, an employee would need to be formally classified as an 'excluded employee', which is a defined status, not a choice based on desired contribution levels. It's advised to consult membership history and a labour advisor before altering deductions.

Aashok Kumar Sharma

Finance/Compliance Consultant

78018 Points Posted on 04 July 2026

Under the current EPF Scheme, 2026, Employee A is not strictly "excluded" just because their salary is above Rs 15,000. However, they now have the legal flexibility to choose to contribute only on the statutory wage ceiling of Rs 15,000 (a monthly contribution of Rs 1,800), treating any amount above that as voluntary. Employers are only obligated to match the mandatory portion.

MannuMatta

Payroll and Compliance Engage

44 Points Posted on 30 October 2026

The July reply on this thread is out of date after 17 Sep 2026.

From that date the statutory wage ceiling for EPF, EPS and EDLI is Rs 25,000 a month (S.O. 5109(E)), not Rs 15,000. So "I want to contribute only on Rs 15,000" is no longer the statutory cap an employee can point to.

Rough position for someone already a member with PF wages of Rs 20,000:

- They are not an excluded employee just because wages once sat above the old Rs 15,000 line.
- Mandatory contribution is now worked out on actual PF wages up to Rs 25,000. At Rs 20,000 that is 12% employee and 12% employer, so Rs 2,400 each side, with the employer share split 8.33% EPS and 3.67% EPF.
- Cutting the deduction back to Rs 1,800 would under-remit against the current ceiling.

"Excluded employee" is a defined status, not a casual label for anyone who wants a lower deduction. If this person was already contributing on actual wages above the old cap, the FAQs also say that arrangement generally continues and is not forced down to the new ceiling.

I would not change the deduction on the strength of the employee's request alone. Check their membership history, how PF wages are defined in your salary structure, and what the September 2026 ECR already reported, then take a CA or labour advisor's view before you touch the master.