Dear All,
This is with regard to the recent Amendment we received related to the PF ceiling (6500 to 15000). Because of this, we are about to rework the salary breakup for our employees. When we are about to implement it, one of the guys sought advice from the PF department. As per the concerned PF person's statement, "pertaining to salary breakups, whatever gross salary an employee receives should be considered for PF, where 40% of HRA (Non-Metro) could be exempted from it.
My concern is, as per the law, we need to deduct PF from the basic & DA and not from the gross. Also, pertaining to HRA, it should be calculated from the basic and not from the DA. Could any of you provide me with clarity on this so that we could implement it accordingly with immediate effect?
Requesting you to look into this and respond back at the earliest.
From India, Tiruchchirappalli
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57This is with regard to the recent Amendment we received related to the PF ceiling (6500 to 15000). Because of this, we are about to rework the salary breakup for our employees. When we are about to implement it, one of the guys sought advice from the PF department. As per the concerned PF person's statement, "pertaining to salary breakups, whatever gross salary an employee receives should be considered for PF, where 40% of HRA (Non-Metro) could be exempted from it.
My concern is, as per the law, we need to deduct PF from the basic & DA and not from the gross. Also, pertaining to HRA, it should be calculated from the basic and not from the DA. Could any of you provide me with clarity on this so that we could implement it accordingly with immediate effect?
Requesting you to look into this and respond back at the earliest.
From India, Tiruchchirappalli
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Dear HR professional, Please note that Pf to be deducted only on Basic and DA not on any other component or gross.
From India, Surat
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From India, Surat
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To all my Friends whose basic salary is 6500 to 15000 & till now PF deductions not done in your CTC, Take home pay there Is an IMP news for you.
EPFO increased its coverage ceiling form 6500 to 15000.
With the increase of 6500 to 15000 EPF coverage ceiling the take Home money Pay of those employees who is having Basic Between 6500 to 15000 will surely get effected(those were not affected till Aug31) and their take home will get reduced.
12 %( Employee share) on Basic has to be paid to EPFO from the Employee side whose basic is 15000 & below. And another 12%Employer share also has to give it to EPFO means total 24% whether the employer share 12% will be calculated in the CTC or extra burden taken by the employer that’s depends upon the employee & employer job agreement.
This is a compulsory Indian social security act obligation to those employees who work in India. No one will get out of it.
CTC calculation is a pay agreement between individual employee & Employer it’s not a statutory obligation by the government. Only the minimum wage is the obligation by the Government.
Scenario 1: (CTC increased) 12% of Employee share will be detected form the employee that much of take home will be deducted from the employee another 12% share will be given by the employer which is add on burden to employer means the CTC got increased(happy to employees)
Scenario 2: (CTC not increased) CTC will get adjusted to the entire 24% EPF means both employee & employer share will get deducted from the employee’s CTC & it will be paid to EPFO whose basic is below 15000. That means on employees take home 24% will be deducted. (Gov will not interfere in this it make sure the minimum wage is (Basic) paid or not)
Note: EPFO will pay 8.75% Annual Interest on your EPF Money. It’s the best interest rate which you get in the present day be happy with this change.
From India, Hyderabad
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EPFO increased its coverage ceiling form 6500 to 15000.
With the increase of 6500 to 15000 EPF coverage ceiling the take Home money Pay of those employees who is having Basic Between 6500 to 15000 will surely get effected(those were not affected till Aug31) and their take home will get reduced.
12 %( Employee share) on Basic has to be paid to EPFO from the Employee side whose basic is 15000 & below. And another 12%Employer share also has to give it to EPFO means total 24% whether the employer share 12% will be calculated in the CTC or extra burden taken by the employer that’s depends upon the employee & employer job agreement.
This is a compulsory Indian social security act obligation to those employees who work in India. No one will get out of it.
CTC calculation is a pay agreement between individual employee & Employer it’s not a statutory obligation by the government. Only the minimum wage is the obligation by the Government.
Scenario 1: (CTC increased) 12% of Employee share will be detected form the employee that much of take home will be deducted from the employee another 12% share will be given by the employer which is add on burden to employer means the CTC got increased(happy to employees)
Scenario 2: (CTC not increased) CTC will get adjusted to the entire 24% EPF means both employee & employer share will get deducted from the employee’s CTC & it will be paid to EPFO whose basic is below 15000. That means on employees take home 24% will be deducted. (Gov will not interfere in this it make sure the minimum wage is (Basic) paid or not)
Note: EPFO will pay 8.75% Annual Interest on your EPF Money. It’s the best interest rate which you get in the present day be happy with this change.
From India, Hyderabad
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You have asked the PF department the wrong question at the wrong time.
There is a raging dispute about what is basic under the PF Act.
There have been court decisions, specifically in Rajasthan and more recently by the Allahabad High Court, which decided that allowances that are paid to all or a group of employees every month and computed on a fixed basis, and not including allowances specifically excluded (overtime and HRA), are part of basic. The Allahabad High Court decision is very detailed and based on premises that are likely to be upheld by the Supreme Court.
The PF officer is considering that decision and giving his "advice" on that basis - take gross less HRA.
However, in view of multiple contrasting decisions, the Supreme Court has taken all pending cases into its own jurisdiction and will give the final verdict. The PF department had issued a notification implementing the Allahabad HC decision, but that was later put on hold by the ministry in view of the pending SC decision.
So, under current rules, you have to pay PF on basic + DA.
Having said that, please remember that the SC decision will be clarificatory in nature (not laying down the law but clarifying that the law was all the time) and therefore applicable with retrospective effect.
From India, Mumbai
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There is a raging dispute about what is basic under the PF Act.
There have been court decisions, specifically in Rajasthan and more recently by the Allahabad High Court, which decided that allowances that are paid to all or a group of employees every month and computed on a fixed basis, and not including allowances specifically excluded (overtime and HRA), are part of basic. The Allahabad High Court decision is very detailed and based on premises that are likely to be upheld by the Supreme Court.
The PF officer is considering that decision and giving his "advice" on that basis - take gross less HRA.
However, in view of multiple contrasting decisions, the Supreme Court has taken all pending cases into its own jurisdiction and will give the final verdict. The PF department had issued a notification implementing the Allahabad HC decision, but that was later put on hold by the ministry in view of the pending SC decision.
So, under current rules, you have to pay PF on basic + DA.
Having said that, please remember that the SC decision will be clarificatory in nature (not laying down the law but clarifying that the law was all the time) and therefore applicable with retrospective effect.
From India, Mumbai
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Hi Mohan,
My question to you is, why do you want to change the pay structure because of the increase in PF ceiling from 6500 to 15000? There is no effect on an employee's salary; the only effect will be on the employer's administrative charges (increase in EDLI contribution). Below are the explanatory calculations:
EDLI will be calculated at 0.5% of the Pension wage, currently Rs. 6500. If it is increased to Rs. 15000, we need to calculate 0.5% on Rs. 15000, and it also applies to the admin charges of EDLI at 0.01% on Rs. 15000.
Due to this, there will be an impact on employer EDLI contributions:
1. The difference amount will be added to the EPF amount of 3.67%, as before.
If Basic is Rs. 20000 (Greater than Rs. 15000)
- EPF Contribution from Employee: Rs. 2400 (12% on Basic 20000)
- EPS Contribution from Employer: Rs. 1250 (8.33% on the maximum limit Rs. 15000*)
- EPF Contribution from Employer: Rs. 1150 (3.67% on 20000 + the difference amount of 416)
2. If the Basic salary is less than Rs. 15000, then the Pension Contribution would be 8.33% on Basic and the PF Contribution from the employer would be 3.67% on Basic. There will not be any difference amount to add to the value of EPF (3.67%).
If Basic is 10000 (Less than Rs. 15000)
- EPF Contribution from Employee: Rs. 1200 (12% on Basic 10000)
- EPS Contribution from Employer: Rs. 833 (8.33% on Basic 10000)
- EPF Contribution from Employer: Rs. 367 (3.67% on basic 10000)
As the new EPF notification is applicable from September 1st, 2014 onwards, and the payroll process will be completed after September 30th, I hope you will have time to make a decision on changing the pay structure.
Kindly share the reason for changing the pay structure when there is no effect.
From India, Visakhapatnam
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My question to you is, why do you want to change the pay structure because of the increase in PF ceiling from 6500 to 15000? There is no effect on an employee's salary; the only effect will be on the employer's administrative charges (increase in EDLI contribution). Below are the explanatory calculations:
EDLI will be calculated at 0.5% of the Pension wage, currently Rs. 6500. If it is increased to Rs. 15000, we need to calculate 0.5% on Rs. 15000, and it also applies to the admin charges of EDLI at 0.01% on Rs. 15000.
Due to this, there will be an impact on employer EDLI contributions:
1. The difference amount will be added to the EPF amount of 3.67%, as before.
If Basic is Rs. 20000 (Greater than Rs. 15000)
- EPF Contribution from Employee: Rs. 2400 (12% on Basic 20000)
- EPS Contribution from Employer: Rs. 1250 (8.33% on the maximum limit Rs. 15000*)
- EPF Contribution from Employer: Rs. 1150 (3.67% on 20000 + the difference amount of 416)
2. If the Basic salary is less than Rs. 15000, then the Pension Contribution would be 8.33% on Basic and the PF Contribution from the employer would be 3.67% on Basic. There will not be any difference amount to add to the value of EPF (3.67%).
If Basic is 10000 (Less than Rs. 15000)
- EPF Contribution from Employee: Rs. 1200 (12% on Basic 10000)
- EPS Contribution from Employer: Rs. 833 (8.33% on Basic 10000)
- EPF Contribution from Employer: Rs. 367 (3.67% on basic 10000)
As the new EPF notification is applicable from September 1st, 2014 onwards, and the payroll process will be completed after September 30th, I hope you will have time to make a decision on changing the pay structure.
Kindly share the reason for changing the pay structure when there is no effect.
From India, Visakhapatnam
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Dear Mr. Pavan Kumar,
With reference to your reply, I have a small doubt. If the Basic pay is Rs. 20,000 (greater than Rs. 15,000), the EPF contribution from the employee would be Rs. 2,400 (12% on Basic 20,000). It's not mandatory; the employer can limit it to Rs. 1,800 only (12% on 15,000). The EPS contribution from the employer would be Rs. 1,250 (8.33% on the maximum limit of Rs. 15,000*). The EPF contribution from the employer would be Rs. 1,150 (3.67% on 20,000 + the difference amount of 416). It's not mandatory; the employer can limit it to Rs. 551 only (3.67% on 15,000).
Please let me know if I am wrong.
T. Prathap, HR Executive, Human Resource Department,
R L Jalappa Narayana Heart Centre,
email: prathap.t@nhhospitals.org
Mobile: 8884291530.
From India, Madras
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With reference to your reply, I have a small doubt. If the Basic pay is Rs. 20,000 (greater than Rs. 15,000), the EPF contribution from the employee would be Rs. 2,400 (12% on Basic 20,000). It's not mandatory; the employer can limit it to Rs. 1,800 only (12% on 15,000). The EPS contribution from the employer would be Rs. 1,250 (8.33% on the maximum limit of Rs. 15,000*). The EPF contribution from the employer would be Rs. 1,150 (3.67% on 20,000 + the difference amount of 416). It's not mandatory; the employer can limit it to Rs. 551 only (3.67% on 15,000).
Please let me know if I am wrong.
T. Prathap, HR Executive, Human Resource Department,
R L Jalappa Narayana Heart Centre,
email: prathap.t@nhhospitals.org
Mobile: 8884291530.
From India, Madras
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Mr. Pratap,
There is no mandate to calculate 12% on the actual basic (In case of more than 15000). We can limit it to 15000, or if the employer wants to benefit the employee as per their policy, they can calculate on actuals. The example I have taken is from the organization where I am currently working, which pays based on actuals.
Thanks & Regards, Pavankumar P
From India, Visakhapatnam
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There is no mandate to calculate 12% on the actual basic (In case of more than 15000). We can limit it to 15000, or if the employer wants to benefit the employee as per their policy, they can calculate on actuals. The example I have taken is from the organization where I am currently working, which pays based on actuals.
Thanks & Regards, Pavankumar P
From India, Visakhapatnam
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Please tell us who can conduct training in tamil on boring of repeated work, working for 25 years Training to avoid body ache for the workmen who are old 45 to 50 years
From India, Pondicherry
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From India, Pondicherry
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can you help me in calculating pension at the age of 58 as per details SCHEME MEMBER 1998 my age 42 years my basic Rs. 40000 pension salary Rs. 6500 New Pension salary Rs. 15000
From India, Jaipur
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From India, Jaipur
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