Stay updated on PF Compliance India for employers and employees, PF applicability, salary limits, and obligations for companies, LLPs, and contractors.
Provident Fund (PF) compliance is a crucial statutory obligation for employers in India. Governed by the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, it aims to provide social security to employees. Ensuring proper PF compliance for companies, contractors, LLPs, and proprietorships is essential to avoid legal consequences and penalties. This blog covers all aspects of PF compliance, including the rules, applicability, salary limits, and frequently asked questions.
PF Compliance India
PF Compliance India refers to the statutory obligations under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, which mandates employers to contribute towards the retirement benefits of their employees. In India, PF compliance is essential for businesses employing 20 or more workers, including companies, LLPs, proprietorships, and contractors.
It involves timely registration with the EPFO, accurate deductions from salaries, regular deposit of contributions, and proper record-keeping. Ensuring PF compliance not only helps avoid legal penalties but also fosters financial security and trust among employees.
PF Rules for the Employer and the Employee
PF is a joint contribution from both the employer and the employee. Here are the core PF rules:
- Employee Contribution: 12% of basic salary + dearness allowance.
- Employer Contribution: 12%, with 8.33% going to the Employees’ Pension Scheme (EPS) and the rest to the EPF.
- Eligibility: Employees earning less than Rs. 15,000 per month are mandatorily covered. Those earning above can opt-in with mutual consent.
- UAN (Universal Account Number): Each employee is assigned a UAN to track their PF account across jobs.
No of Employees for PF Applicability
A company must register for PF if it employs 20 or more employees at any point in time. However, certain establishments with less than 20 employees can voluntarily register.
Note: Once registered, the establishment must continue PF contributions even if the number of employees drops below 20.
For Which Companies PF is Not Mandatory?
PF is not mandatory for companies:
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Employing less than 20 employees, and
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Not engaged in any scheduled activity notified under the Act.
However, such companies can still register voluntarily under the EPF scheme.
PF Compliance Checklist
To ensure smooth and legal PF operations, employers must follow this PF compliance checklist:
- Register with the EPFO within 1 month of reaching 20 employees.
- Deduct and deposit PF contributions before the 15th of every month.
- Maintain accurate employee records and PF accounts.
- Generate and submit Electronic Challan cum Return (ECR).
- Display PF registration certificate at a prominent place.
- Ensure timely KYC verification of employees’ UANs.
- File annual returns (Form 3A & 6A).
PF Compliance for Company Structures
- PF Compliance for Company: All registered companies, including Pvt Ltd and public companies, must comply with EPF rules if they employ 20 or more people.
- Is PF mandatory for Pvt Ltd Company? Yes. A Private Limited Company must register for PF once it has 20 or more employees.
- Is PF mandatory for LLP Company? Yes. If an LLP has 20 or more employees, PF registration is mandatory.
- Is PF mandatory for proprietorship firm? Yes, if the employee strength reaches 20 or more. It is not based on business structure but employee count.
- PF Compliance for Contractor: Companies hiring contractors must ensure PF compliance for contractor employees if the total workforce, including contractor employees, is 20 or more.
- For which companies PF is not mandatory? Companies with fewer than 20 employees are exempt unless they voluntarily opt in. However, if they cross the threshold even once, registration becomes compulsory.
- Is PF registration mandatory for company incorporation? No, PF registration is not mandatory at the time of incorporation. It becomes mandatory upon reaching 20 employees.
What is the Salary Limit for PF?
As of 2025, the salary limit for mandatory PF contribution is ₹15,000 per month. Employees earning more than this can opt-out at the time of joining, but only if:
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They have never been a PF member before.
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Their salary exceeds ₹15,000 at the time of joining.
Otherwise, even employees earning above ₹15,000 are automatically enrolled.
Is PF mandatory for salary above 15000?
No, PF is not mandatory for employees drawing salaries above Rs. 15,000 unless both the employer and employee opt for it.
Penalties for Non-Compliance
- Late payment attracts damages up to 25% and interest of 12% per annum.
- Prosecution under Section 14 of the Act may lead to imprisonment.
FAQs
Q1. Can a company with less than 20 employees voluntarily register for PF?
Yes, companies can voluntarily register and comply with PF provisions.
Q2. How can a company ensure contractor compliance?
By including PF obligations in the contract and monitoring their submissions.
Q3. Is there a penalty for late registration?
Yes, retrospective liabilities and penalties can be levied.
Q4. Can employees opt out of PF?
Only at the time of joining and only if their salary exceeds Rs. 15,000 and they have never been a PF member before.
👉 For a complete overview of annual statutory compliance and their deadlines, check out our detailed blog on the Compliance Calendar 2025 India.
Conclusion
PF compliance is not merely a legal formality but a fundamental responsibility towards employee welfare. Whether you are a startup, LLP, or a large private company, understanding your PF obligations helps you avoid penalties and foster a secure workplace. For businesses in India, staying compliant with PF regulations ensures smooth operations and builds trust among employees.
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This content is for general informational purposes only and does not constitute legal advice.