new delhi in an employeefriendly move the government today made provident fund contribution optional for workers getting salary below a threshold however the employer will continue to contribute his share of the pf irrespective of the worker opting not to pay his contribution for employees below a certain threshold of monthly income contribution to epf should be optional without affecting or reducing the employers contribution finance minister arun jaitley said in his budget speech the budget proposals however did not specify the salary threshold for this at present all employees are required to pay 12 per cent of basic wages including basic salary and da as contribution to the pf the employers make a matching contribution with 833 per cent going towards pension 05 per cent towards employees deposit linked insurance edli scheme and remaining towards provident fund also the budget has provided that the members of private provident fund trusts will not have to pay tax on premature withdrawals provided the amount is either less than rs 30000 or their tax liability is nil even after including the withdrawn sum to their income this facility will also be available to senior citizens as per existing provisions in respect of such premature withdrawal the trustees of the recognised provident fund trusts shall deduct tax as computed at the time of payment under the existing provisions epf mp act it has been provided that withdrawal shall be taxable if the employee makes withdrawal before continuous service of five years other than the cases of termination due to ill health closure of business etc and does not opt for transfer of accumulated balance to new employer it is proposed to insert a new provision in the act for deduction of tax at the rate of 10 per cent on premature taxable withdrawal from employees provident fund scheme epfo