Opting Out of the EPF Scheme for Employees Earning Above INR 15,000
Updated on May 30, 2024
Contents
Joining a New Employment
An employee with a basic salary (basic pay plus dearness allowance) exceeding INR 15,000 per month at the time of joining a new organization can opt out of the EPF scheme. The employee must submit Form 11 to the employer, stating that they wish to opt out of the scheme.
Existing Members
Once an employee becomes a member of the EPF scheme, they cannot opt out while they continue to work for the same employer, regardless of their salary exceeding INR 15,000 per month. If an employee was a member of the EPF in a previous employment and joins a new organization, they must continue to be a member of the EPF scheme in the new organization.
Steps to Opt-Out (for eligible new employees)
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Form 11 Submission
The employee needs to fill and submit Form 11 to their employer. Form 11 is a declaration form which includes details such as previous employment, EPF account number (if any), and the option to opt out.
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Employer’s Responsibility
The employer is responsible for verifying the details provided by the employee. The employer must maintain the records of employees who have opted out.
Important Considerations
Even if an employee’s salary exceeds INR 15,000, they can still choose to contribute voluntarily to the EPF scheme if they desire to benefit from its long-term savings and pension advantages.
For employees earning a salary less than or equal to INR 15,000 per month, EPF contributions are mandatory, and neither the employee nor the employer can opt-out.
Employees who have been contributing to the EPF in their previous jobs must continue to contribute even if their salary exceeds INR 15,000 upon changing jobs.
Practical Scenario
If you are a new employee with a monthly salary exceeding INR 15,000 and you do not wish to contribute to the EPF, you should:
- Declare Your Intent: Inform your new employer at the time of joining.
- Submit Form 11: Complete and submit Form 11, indicating your desire to opt out of the EPF scheme.
Summary
Employees earning more than INR 15,000 per month can opt out of the EPF scheme only if they are joining a new employment and have never been a member of the EPF scheme before. Existing members must continue their contributions, and once enrolled, opting out is not permissible even if the salary exceeds INR 15,000.
FAQs
Can I opt out of the EPF scheme if my salary exceeds INR 15,000?
No, existing members cannot opt out of the EPF scheme even if their salary exceeds INR 15,000. New employees with a basic salary above INR 15,000 can opt out by submitting Form 11.
What is Form 11?
Form 11 is a declaration form where the employee provides details about their previous employment, EPF account number (if any), and indicates their intention to opt out of the EPF scheme.