Dear Jyothi,
1) If basic salary of an Employee "A" is less than Rs.15000/-, How do we need to contribute for EPS ? is it 8.33% of the basic pay or Minimum of Rs.1000/- ?
- The EPS contribution will be 8.33% on basic salary or 15,000/- whichever is lower . Minimum 1000/- is not EPS deduction, it is the minimum amount the employee needs to get as Pension per month after his retirement.
2) If an Employee "B"s total gross salary is Rs.40,000/- and Basic is only Rs.10,000/- (25% of gross is basic) rest of the amount adjusted towards Special Allowance (excluding HRA,Conveyance, PF), how do we need to calculate the pensionable wage ? Do we need to change the calculations from the existing basic of Rs.10,000 to Rs.15000 ?
- Deduction should be on Basic only, please leave the gross salary concept in case of EPF or EPS , we no need to change the salary structure for the purpose of PF, leave it like that and calculate only on Basic salary i.e on 10,000 only in your case.
Employee contribution
12% on 10,000 -
Employer contribution-
EPF - 3.67% on 10,000 and 8.33% on 10,000.
Hope I clarified your doubt, Please let me know if you have any other queries.
8884291530
From India, Madras
291) If basic salary of an Employee "A" is less than Rs.15000/-, How do we need to contribute for EPS ? is it 8.33% of the basic pay or Minimum of Rs.1000/- ?
- The EPS contribution will be 8.33% on basic salary or 15,000/- whichever is lower . Minimum 1000/- is not EPS deduction, it is the minimum amount the employee needs to get as Pension per month after his retirement.
2) If an Employee "B"s total gross salary is Rs.40,000/- and Basic is only Rs.10,000/- (25% of gross is basic) rest of the amount adjusted towards Special Allowance (excluding HRA,Conveyance, PF), how do we need to calculate the pensionable wage ? Do we need to change the calculations from the existing basic of Rs.10,000 to Rs.15000 ?
- Deduction should be on Basic only, please leave the gross salary concept in case of EPF or EPS , we no need to change the salary structure for the purpose of PF, leave it like that and calculate only on Basic salary i.e on 10,000 only in your case.
Employee contribution
12% on 10,000 -
Employer contribution-
EPF - 3.67% on 10,000 and 8.33% on 10,000.
Hope I clarified your doubt, Please let me know if you have any other queries.
8884291530
From India, Madras
Hi Prathap,
Usually for every financial year companies budget employees salaries and it will be fixed to certain XYZ amount for the entire year. Each company has its own policy to make the changes in the salary structure and there is no rule that employees net take home should not be reduced because of the increase in wage ceiling in EPS. Though my opinion looks like employer friendly, this is the hard truth that any employer can argue. If there is any rule/policy regarding net take home should not reduce, kindly share to everyone which can be helpful for other HR's too
Regards,
Jyothi
From India, Bangalore
Usually for every financial year companies budget employees salaries and it will be fixed to certain XYZ amount for the entire year. Each company has its own policy to make the changes in the salary structure and there is no rule that employees net take home should not be reduced because of the increase in wage ceiling in EPS. Though my opinion looks like employer friendly, this is the hard truth that any employer can argue. If there is any rule/policy regarding net take home should not reduce, kindly share to everyone which can be helpful for other HR's too
Regards,
Jyothi
From India, Bangalore
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