Hi Everyone,
I am working in a Construction Company based in Maharashtra. I want to know about Basic wages for computation of PF. Generally, we are calculating PF on Gross Salary which includes Basic+HRA+Medical. As per the New amendment in the wage ceiling of Rs. 15,000/-, many of our employees are not ready for the extra burden. How can I do the working so that the burden will be less both on the employee and employer? How can I work out the salary as per the minimum wage?
Regards,
From India, Nagpur
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I am working in a Construction Company based in Maharashtra. I want to know about Basic wages for computation of PF. Generally, we are calculating PF on Gross Salary which includes Basic+HRA+Medical. As per the New amendment in the wage ceiling of Rs. 15,000/-, many of our employees are not ready for the extra burden. How can I do the working so that the burden will be less both on the employee and employer? How can I work out the salary as per the minimum wage?
Regards,
From India, Nagpur
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Dear Member,
What you are doing is totally wrong. PF is not payable on gross. Now you cannot reduce the salary for the PF component. It seems you are mistaken conceptually, and you are mistaken not only in PF but in other applicable laws too.
You need a person like me on retainership who can guide you from time to time. The answer to your query cannot be given in one post or at a stretch. This forum has many discussions on PF which you can read and arrive at the right answer for you.
From India, Mumbai
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2636What you are doing is totally wrong. PF is not payable on gross. Now you cannot reduce the salary for the PF component. It seems you are mistaken conceptually, and you are mistaken not only in PF but in other applicable laws too.
You need a person like me on retainership who can guide you from time to time. The answer to your query cannot be given in one post or at a stretch. This forum has many discussions on PF which you can read and arrive at the right answer for you.
From India, Mumbai
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First: PF is to be computed on basic + DA. You need to correct that. There is, of course, nothing to stop you from contributing extra (subject to the approval of the employee and the total of all deductions not exceeding 50% of the salary). But it is optional. There is a Supreme Court ruling that you can revert to contributing PF on basic + DA and up to the salary ceiling (search the forum) at any time. So, compute the PF on basic + DA subject to a ceiling of 15000. If the PF amount is similar to what you are already paying, your workers will be happy. Or at least the hit will be lower. But keep documentation and explanation ready, as the PF department is likely to ask questions.
Further, check how you filed the returns so far. If you stated your basic + allowances in the returns as basic, then you will have a big problem. In that case, you need a good PF consultant to work it out for you and liaise with the department to clear this.
From India, Mumbai
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Further, check how you filed the returns so far. If you stated your basic + allowances in the returns as basic, then you will have a big problem. In that case, you need a good PF consultant to work it out for you and liaise with the department to clear this.
From India, Mumbai
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PF Judgment Supreme Court Basic Wages (1).pdf