Since lot of discusion is active in this forum related to PF I thought I will share my query in this thread.
I have few doubts regarding PF contribution. Till september 2014, we calculated PF based on 6500 basic salary. The cut off was 780 from employee and 885 from employer.
I understand, based on the new notification, the calculation should be done according to the basic salary of each employee. My doubt is regarding employer contribution .The employer contribution was 13.61% , but now our acountant was saying that the employer contribution is 13.51 %. I rechecked it with the accountant and he confirmed that the contribution inclusive of all expenses from employer side is 13.51%.
Can you clarify on this matter.
From India, New Delhi
4I have few doubts regarding PF contribution. Till september 2014, we calculated PF based on 6500 basic salary. The cut off was 780 from employee and 885 from employer.
I understand, based on the new notification, the calculation should be done according to the basic salary of each employee. My doubt is regarding employer contribution .The employer contribution was 13.61% , but now our acountant was saying that the employer contribution is 13.51 %. I rechecked it with the accountant and he confirmed that the contribution inclusive of all expenses from employer side is 13.51%.
Can you clarify on this matter.
From India, New Delhi
Dar Mr.Rameh
Your salary structure bifurcation is O.K. But to see that the Basic salary should not be less than the rates of Minimum wages as specified in the act. The other allowances are not coming under the definition of wages which are not attract any deductions such as PF, ESIC, Bonus and Gratuity. For all these it will consider only basic and DA.
Now you can calculate and fix the structure.
Adoni Suguresh
Sr.Executive (Pers, Admin & Ind.Rels) Rtd
Labour Laws Consultant
From India, Bidar
Your salary structure bifurcation is O.K. But to see that the Basic salary should not be less than the rates of Minimum wages as specified in the act. The other allowances are not coming under the definition of wages which are not attract any deductions such as PF, ESIC, Bonus and Gratuity. For all these it will consider only basic and DA.
Now you can calculate and fix the structure.
Adoni Suguresh
Sr.Executive (Pers, Admin & Ind.Rels) Rtd
Labour Laws Consultant
From India, Bidar
Dear Ramesh,
PF contribution can't be reduced by manipulating structure. However since you have recently joined & if the contributions are not yet remitted to EPF it may be possible with the consent of your employer, but from the very first contribution. For EPF wage includes basic+DA+food coupon+ retention allowance as per the latest cirular from EPFO. But why go through all these hassles? EPF contribution is a very good tax saving instrument & in any case you will need some tax saving instrument, is it not?
From India, Thane
PF contribution can't be reduced by manipulating structure. However since you have recently joined & if the contributions are not yet remitted to EPF it may be possible with the consent of your employer, but from the very first contribution. For EPF wage includes basic+DA+food coupon+ retention allowance as per the latest cirular from EPFO. But why go through all these hassles? EPF contribution is a very good tax saving instrument & in any case you will need some tax saving instrument, is it not?
From India, Thane
Dear Ramya R.N.
The new amendment of PF ony changes the wage ceiling remaining all calculations are remained the same without any chnage. I do not how you are deducting employees share an amount of Rs.780 ? Very simple calculation Rs.6500 X 12 = 780 which will directly goes to Employees contribution in PF account. Now come to employers contribution 6500 x 12 =780. From and out of this an amount of Rs.541 will goes to EPS and remaining 239 will goes again to employees PF account as employers contribution. I do not on what basis your accountant is telling 13.51 %. The employers share is also 12 % only. The other charges such as Administrative charges,EDLi etc shall be borne by the employer.
Salary ceiling limit for employees pension will be Rs.15000 p.m. Hitherto it was Rs..67500/ This m,means 8.33 % of onRs.15000 basic ie Rs.1250 p.m. will be diverted to pension fund. Hitherto it was Rs.541 only on Rs.6500 @ m8.33%. This changes are with effect from 1st September, 2014.
I thik I have cleared your doubt. If you satisfy with this confirm your views other wise if you have still doubt you can seek clarifications in the matter. On this several times I have replied in this cite by giving an exemplary cases.
Adoni Suguresh
Sr.Executive (Pers, Admin & Ind.Rels) Rtd
Labour Laws Consultant
From India, Bidar
The new amendment of PF ony changes the wage ceiling remaining all calculations are remained the same without any chnage. I do not how you are deducting employees share an amount of Rs.780 ? Very simple calculation Rs.6500 X 12 = 780 which will directly goes to Employees contribution in PF account. Now come to employers contribution 6500 x 12 =780. From and out of this an amount of Rs.541 will goes to EPS and remaining 239 will goes again to employees PF account as employers contribution. I do not on what basis your accountant is telling 13.51 %. The employers share is also 12 % only. The other charges such as Administrative charges,EDLi etc shall be borne by the employer.
Salary ceiling limit for employees pension will be Rs.15000 p.m. Hitherto it was Rs..67500/ This m,means 8.33 % of onRs.15000 basic ie Rs.1250 p.m. will be diverted to pension fund. Hitherto it was Rs.541 only on Rs.6500 @ m8.33%. This changes are with effect from 1st September, 2014.
I thik I have cleared your doubt. If you satisfy with this confirm your views other wise if you have still doubt you can seek clarifications in the matter. On this several times I have replied in this cite by giving an exemplary cases.
Adoni Suguresh
Sr.Executive (Pers, Admin & Ind.Rels) Rtd
Labour Laws Consultant
From India, Bidar
Dear Ramya,
There was a typographical error in my advise. I am correcting it.
Your deduction of Rs.780 from the employees is coorect.
In second para you read as Rs.6500 and not 67500/- which is typographical error.
I regret for the same.
Adoni Suguresh
Labour Laws Consultant
From India, Bidar
There was a typographical error in my advise. I am correcting it.
Your deduction of Rs.780 from the employees is coorect.
In second para you read as Rs.6500 and not 67500/- which is typographical error.
I regret for the same.
Adoni Suguresh
Labour Laws Consultant
From India, Bidar
Thank you for the reply MR Adoni Suguresh.
You have cleared most of my doubts related to PF. As you mentioned the admin charges ,EDLI will be beared by he company , but inclusive of all this charges the employer expense on this matter is 13.61% right ? But our accountant is saying that it is 13.51 % only.
Employer Contribution - EPS- 8.33%
EPF- 3.67% on 15000
EDLI charges- 0.5%
EPF Admin charges - 1.1%
EDLI Admin charges- 0.01%
From India, New Delhi
You have cleared most of my doubts related to PF. As you mentioned the admin charges ,EDLI will be beared by he company , but inclusive of all this charges the employer expense on this matter is 13.61% right ? But our accountant is saying that it is 13.51 % only.
Employer Contribution - EPS- 8.33%
EPF- 3.67% on 15000
EDLI charges- 0.5%
EPF Admin charges - 1.1%
EDLI Admin charges- 0.01%
From India, New Delhi
In view of hike in the ceiling of wages to Rs.15,000/- and all the components of salary which are ordinarily, necessarily and uniformly paid to the employees are being treated as basic wage for the purpose of PF, it is better to have only 2 components i.e. BASIC and HRA only, if the Gross Salary is less than Rs.15000/-. If it is more than Rs.15,000/-, structure in such a way that you have either Basic & HRA only or Basic (Rs.15000) plus HRA and other components.
KMR, Bangalore
From India, Bangalore
KMR, Bangalore
From India, Bangalore
Dear Ramya,
I am happy to see that your doubts are cleared. Now the confusion of your employers contribution. Your calulation is correct as mentioned by you 13.61.% If your accountant says if it is 13.51% show the details of head of accounts. Even then if he is not satisfy, let him decposit/remit as per 13.51%. Does not matter. Whatever may be the remittance to EPFO shall be subject to audit oi your establishment By your jurisdiction P.F.Office At the end of year you are required to sub mit the details in Form 3A, Form 6A , Form 12A and details of bank remittance with DD or online details for their scrutiny. If any discrepancy is noticed they will issue the demand notice in case of short remittance or shall be adjusted in case of excess payment. Once account is finalized and audited you will get Form 23 ie Statement of account of your employees. Only the thing is to take care deposit the contribution within the stipulated time to avoid penal clause. I hope now you are cleared.
Adoni Suguresh
Sr.Executive (Pers, Admin & Ind.Rels) Rtd
Labour Laws Consultant
From India, Bidar
I am happy to see that your doubts are cleared. Now the confusion of your employers contribution. Your calulation is correct as mentioned by you 13.61.% If your accountant says if it is 13.51% show the details of head of accounts. Even then if he is not satisfy, let him decposit/remit as per 13.51%. Does not matter. Whatever may be the remittance to EPFO shall be subject to audit oi your establishment By your jurisdiction P.F.Office At the end of year you are required to sub mit the details in Form 3A, Form 6A , Form 12A and details of bank remittance with DD or online details for their scrutiny. If any discrepancy is noticed they will issue the demand notice in case of short remittance or shall be adjusted in case of excess payment. Once account is finalized and audited you will get Form 23 ie Statement of account of your employees. Only the thing is to take care deposit the contribution within the stipulated time to avoid penal clause. I hope now you are cleared.
Adoni Suguresh
Sr.Executive (Pers, Admin & Ind.Rels) Rtd
Labour Laws Consultant
From India, Bidar
Mr. Ramesh! You can't decrease your payment once raised but I don't understand why you want to pay it on basic when you are paying it right on gross. There's a rule passed to pay it on gross and it has to be understood that those who don't pay it on gross will have to pay the penalty in future. It is important to note that you will be caught by the PF official if any of your employees complain that they are being paid less or on basic instead of gross. Then they will impose penalty. But most of the organisations are not aware of that. So please continue to pay on gross.
From India, Guntur
From India, Guntur
In view of judgement of High Courts, the PF Dept has issued a circular dated 21.06.2011. As per the Circular/ judgements, all the allowances except HRA are to be included in the basic wages, if they are uniformly, necessarily and ordinarily paid to all the employees.In view of this, it is better to have 2 components only viz, Basic+DA and HRA, if the gross salary is less than Rs.15000/- If the gross salary is more than Rs.15000/-, please ensure that Basic + HRA is Rs.15000/- or more OR Try to keep only 2 components. Otherwise, you will have to pay PF contribution on all the components except HRA. ...K M RAMACHANDRA.
From India, Bangalore
From India, Bangalore
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.
Salary Sheet & PF PT Calculation & Challan Nov 2010.xls
PF ON LEAVE SALARY.jpg