gross wages as per EPF ECR 2 = the amount on which basis you clculate the slab of profession tax , or the amount which is to be submitted in form 16 , ( both are same)
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Hi, can any one explain how to calculate gross wages in the attached file. Regards, Nandini
From India, Mumbai
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From India, Mumbai
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If we calculate bonus and overtime for 16 (TDS calculation) Professional tax, then it would also be taken under gross wages. Remember, they are not demanding the contribution on gross wages, but the gross wages summing up for 12 months would match with the wages + salary expense of the establishment.
They are also asking for "excluded employee details," i.e., the number of persons and the amount paid to them. This includes either the persons of 58+ who are not in EPF list, or the persons who have not been included in EPF or ESIC since the start due to high-paid salary. This measure is taken to trace out the employers who are showing expense under wages but evading the labor welfare benefits.
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They are also asking for "excluded employee details," i.e., the number of persons and the amount paid to them. This includes either the persons of 58+ who are not in EPF list, or the persons who have not been included in EPF or ESIC since the start due to high-paid salary. This measure is taken to trace out the employers who are showing expense under wages but evading the labor welfare benefits.
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@NandiniB Please find your file marked for gross wages required for ECR generation
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Hi Sharma, Thank you for the reply. PFA the file as my senior person did. Gross wage is different from your calculation to her calculation please explain me. Regards, Nandini
From India, Mumbai
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From India, Mumbai
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There can be different interpretations for gross wages and PF qualifying/contributing wages when it is a case with regard to an employee whose monthly salary exceeds Rs 15,000. An employer is under no compulsion to pay PF on an amount exceeding Rs 15,000, though many employers contribute on the entire salary or at least the entire Basic (plus DA) without restricting it to Rs 15,000. This is the case with most of the big companies, whereas medium-sized companies and small companies would go for restricting it to 12% of Rs 15,000.
In the former case, the PF qualifying Gross Salary is Rs 180,000 per annum (15,000 x 12). Therefore, the first interpretation of gross salary is that it is a salary subject to a maximum of Rs 15,000 per month or Rs 180,000 per annum. At the same time, if your establishment pays PF without any salary ceiling, then it can be the amount on which PF is deducted. This is the second interpretation and as per this interpretation and continuing the example given by Nandini, the gross salary is Rs 92,788 per month or Rs 1,113,451 per annum.
Now, had the employee been in receipt of a salary less than Rs 15,000, certainly, his other allowances would also attract PF. That means in the case of an employee whose salary is not more than Rs 15,000, the PF qualifying salary is not just Basic salary and DA, but it is the gross salary less HRA. That means, PF qualifying salary should include all such allowances which are paid while an employee is on duty or on leave except HRA. There has been a misconception among us that PF is payable only on Basic salary and dearness allowance. Certainly, it is true that PF is payable only on Basic wages and DA, but what is basic salary has been defined very clearly in section 2(b) of the EPF & MP Act as the whole emoluments payable as per the contract of employment except HRA. Therefore, basic wages shall include allowances also. With regard to the treatment of special allowance, we have quite a number of court verdicts which say that a special allowance paid to all the employees should be taken as part of the salary, whereas if it is paid to a particular employee considering his special skill or some kinds of hardship to which he is exposed to during the course of employment, then such an allowance shall be excluded from salary.
Hope this will clear the doubts of Nandini.
Madhu.T.K
From India, Kannur
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In the former case, the PF qualifying Gross Salary is Rs 180,000 per annum (15,000 x 12). Therefore, the first interpretation of gross salary is that it is a salary subject to a maximum of Rs 15,000 per month or Rs 180,000 per annum. At the same time, if your establishment pays PF without any salary ceiling, then it can be the amount on which PF is deducted. This is the second interpretation and as per this interpretation and continuing the example given by Nandini, the gross salary is Rs 92,788 per month or Rs 1,113,451 per annum.
Now, had the employee been in receipt of a salary less than Rs 15,000, certainly, his other allowances would also attract PF. That means in the case of an employee whose salary is not more than Rs 15,000, the PF qualifying salary is not just Basic salary and DA, but it is the gross salary less HRA. That means, PF qualifying salary should include all such allowances which are paid while an employee is on duty or on leave except HRA. There has been a misconception among us that PF is payable only on Basic salary and dearness allowance. Certainly, it is true that PF is payable only on Basic wages and DA, but what is basic salary has been defined very clearly in section 2(b) of the EPF & MP Act as the whole emoluments payable as per the contract of employment except HRA. Therefore, basic wages shall include allowances also. With regard to the treatment of special allowance, we have quite a number of court verdicts which say that a special allowance paid to all the employees should be taken as part of the salary, whereas if it is paid to a particular employee considering his special skill or some kinds of hardship to which he is exposed to during the course of employment, then such an allowance shall be excluded from salary.
Hope this will clear the doubts of Nandini.
Madhu.T.K
From India, Kannur
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@Nandini,
In any term, the EPF amount does not differ. Under the basic concept of EPF, they want the data from the employer. As per their Profit and Loss account, some amount is debited under the head "wages/Salary." If the amount is reconciled with 12 challans of the year, with gross wages, then they will not bother much.
Please note that after ECR submission, they ask for "excluded employee" salary, the number of persons, and the amount as well. In gross, it's the way to reconciliation with the accounts and labor department returns, and to trace out if the establishment has avoided paying the EPFO dues, which are payable to the department.
Thank you.
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In any term, the EPF amount does not differ. Under the basic concept of EPF, they want the data from the employer. As per their Profit and Loss account, some amount is debited under the head "wages/Salary." If the amount is reconciled with 12 challans of the year, with gross wages, then they will not bother much.
Please note that after ECR submission, they ask for "excluded employee" salary, the number of persons, and the amount as well. In gross, it's the way to reconciliation with the accounts and labor department returns, and to trace out if the establishment has avoided paying the EPFO dues, which are payable to the department.
Thank you.
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Hi Madhu and Sharma, I understand the explanation but still i can’t able to make it out how gross wage came Rs.378917/-. Regards, Nandini
From India, Mumbai
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From India, Mumbai
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@nandini some columns which is made "0" in your sheet, where i have marked green, may have some value, look into the payslip of the employee, and you will find the facts.
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Gross Salary(1).xls