Dear Professionals,
I am facing an issue while calculating the salary component. For an employee with a basic salary of ₹72,000 per month, no other allowance or DA is given. The employer's PF contribution is ₹1,800, EDLI charges are ₹75, and EPF admin charges are ₹75. This brings the total CTC to ₹8,87,400 per annum. We use some payroll software. Here EPF employer contribution, EDLI Admin changes are all auto calculated. Can not edit it. Its calculating correctly for EPF contribution 1800 Rs, and also EDLI Rs 75 but for Admin charges its calculating on basic pay.
During a previous discussion with payroll software team, I was informed that EPF admin charges are calculated based on the basic salary and not restricted to EPF wages of ₹15,000. However, after consulting with several CA professionals, they confirmed that the EPF admin charges depend on the employer's contribution. If the PF wage contribution is restricted to ₹15,000, the EPF admin charges should also be paid on this limit, not on the basic salary.
I have attached a document from the EPF website, which mentions that if the wage limit is increased, the employer must pay admin charges on the increased wage. However, this is not applicable in our case, as the contribution is restricted to ₹15,000. For reference, according to Para 26(6) of the EPF Scheme, a joint request from both the employer and employee is required to contribute on higher wages. In such cases, the employer must pay administrative charges on the higher wages (above ₹15,000).
I am also attaching a link to Saral PayPack, another accounting software, where example 2 clearly explains a case where the employer contributes based on the ceiling limit, and the employee on net pay. You can check it here: [https://saralpaypack.com/blogs/pf-admin-charges/](https://saralpaypack.com/blogs/pf-admin-charges/).
so I need to know whether employer can pay EPF admin charges of Rs 75 (15k*0.5%) or employer has to pay 0.5% on baic i.e. Rs 360 (72k*0.5%)
From India, Chennai
I am facing an issue while calculating the salary component. For an employee with a basic salary of ₹72,000 per month, no other allowance or DA is given. The employer's PF contribution is ₹1,800, EDLI charges are ₹75, and EPF admin charges are ₹75. This brings the total CTC to ₹8,87,400 per annum. We use some payroll software. Here EPF employer contribution, EDLI Admin changes are all auto calculated. Can not edit it. Its calculating correctly for EPF contribution 1800 Rs, and also EDLI Rs 75 but for Admin charges its calculating on basic pay.
During a previous discussion with payroll software team, I was informed that EPF admin charges are calculated based on the basic salary and not restricted to EPF wages of ₹15,000. However, after consulting with several CA professionals, they confirmed that the EPF admin charges depend on the employer's contribution. If the PF wage contribution is restricted to ₹15,000, the EPF admin charges should also be paid on this limit, not on the basic salary.
I have attached a document from the EPF website, which mentions that if the wage limit is increased, the employer must pay admin charges on the increased wage. However, this is not applicable in our case, as the contribution is restricted to ₹15,000. For reference, according to Para 26(6) of the EPF Scheme, a joint request from both the employer and employee is required to contribute on higher wages. In such cases, the employer must pay administrative charges on the higher wages (above ₹15,000).
I am also attaching a link to Saral PayPack, another accounting software, where example 2 clearly explains a case where the employer contributes based on the ceiling limit, and the employee on net pay. You can check it here: [https://saralpaypack.com/blogs/pf-admin-charges/](https://saralpaypack.com/blogs/pf-admin-charges/).
so I need to know whether employer can pay EPF admin charges of Rs 75 (15k*0.5%) or employer has to pay 0.5% on baic i.e. Rs 360 (72k*0.5%)
From India, Chennai
If the employee is paying his contribution calculated on 12% of Rs 72000 (ie, actual basic pay) then the administration charges should also be calculated on that salary. That is the EPF qualifying salary is Rs 72000, and therefore, the admin charges should also be on Rs 72000, ie, Rs 360. At the same time, if both the employee and employer are contributing at 12% of Rs 15000, then the admin charges will also be on Rs 15000, ie, Rs 75. The principle is very simple, adminsuration charges is a charge to manage the funds, and the higher the amount managed, higher should be the charges. If the funds contributed by the employee is Rs 8640, the cost of administration should be Rs 360, right?
In the case of EDLI, however, the payment is at the rate of 0.5% on the salary subject to a maximum of Rs 15000. There is no such condition attached to administration charges.
From India, Kannur
4246In the case of EDLI, however, the payment is at the rate of 0.5% on the salary subject to a maximum of Rs 15000. There is no such condition attached to administration charges.
From India, Kannur
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Epf admin rate 0.50 w.e.f 01jun2018.pdf
Job Description - HR & Admin.doc