Dear
let us say a company does a revision of the entire salary structure wherein adding allowances & reimbursement heads. this maintains the CTC, increases the Cash in Hand but the amount kept under Basic pay decreases. This affects the PF contribution, to some extent is decreased for some employees. Can that company do this?
Pl help. I'm confused due to the said section 12 of PF act 1952. Pl remember that the take home salary has been increased but the basic pay decreased to divide the CTC into different heads.
From India, Chandigarh
let us say a company does a revision of the entire salary structure wherein adding allowances & reimbursement heads. this maintains the CTC, increases the Cash in Hand but the amount kept under Basic pay decreases. This affects the PF contribution, to some extent is decreased for some employees. Can that company do this?
Pl help. I'm confused due to the said section 12 of PF act 1952. Pl remember that the take home salary has been increased but the basic pay decreased to divide the CTC into different heads.
From India, Chandigarh
Dear Sonica, Please understand we can not decrease Basic salary at any cost, other wise you will be answerable to PF department. Regards, Jagdish Pathak # 9811488664
From India, Gurgaon
49From India, Gurgaon
Dear Sonica, It’s not only Basic but also DA that you cannot decrease at any cost. Regards
From India, New Delhi
From India, New Delhi
Hi,
So long as the Basic + DA is below Rs.6500/- per month it is mandatory to pay PF on Rs.6500/-. You cannot reduce the basic+da component in such cases.
And
Once the Basic+Da crosses Rs.6500/- then it is mandatory upto Rs.6500/- and voluntary on the salary above Rs.6500/-.
But
Any reduction in basic +Da (in respect of salaries above Rs.6500/- to the level of Rs.6500/-) would be not objectionable under law as the PF contribution is being protected and the objective of PF scheme is not undermined.
Think it over.
regards
From India, Bangalore
So long as the Basic + DA is below Rs.6500/- per month it is mandatory to pay PF on Rs.6500/-. You cannot reduce the basic+da component in such cases.
And
Once the Basic+Da crosses Rs.6500/- then it is mandatory upto Rs.6500/- and voluntary on the salary above Rs.6500/-.
But
Any reduction in basic +Da (in respect of salaries above Rs.6500/- to the level of Rs.6500/-) would be not objectionable under law as the PF contribution is being protected and the objective of PF scheme is not undermined.
Think it over.
regards
From India, Bangalore
Are there any fixed/minimum percentages to DA, HRA & Conveyance allowances in a limited company? What are their applicability formulas if any? Like DA is some % of Basic, HRA is some % of Basic or Basic+DA and so on.
From India, Chandigarh
From India, Chandigarh
Dear Sonica,
There is no such prescribed percentage for various components in the salary structure.
However, income tax benefit is available on the various allowances upto certain limits only.
In case you wish to re-structure the salary, please keep in mind the income tax benefits available to the employees and the employer so that it is beneficial for both.
Hope this would help you.
Thanks & Regards,
Avika
Kapgrow Corporate Advisory Services Pvt. Ltd.
E-173, Kalkaji, New Delhi - 110019
09310270884
From India, New Delhi
There is no such prescribed percentage for various components in the salary structure.
However, income tax benefit is available on the various allowances upto certain limits only.
In case you wish to re-structure the salary, please keep in mind the income tax benefits available to the employees and the employer so that it is beneficial for both.
Hope this would help you.
Thanks & Regards,
Avika
Kapgrow Corporate Advisory Services Pvt. Ltd.
E-173, Kalkaji, New Delhi - 110019
09310270884
From India, New Delhi
Hi Sonica,
The PF is applicable on a minimum basic of Rs 6500/- per month. So if an employee's Basic + DA is 6500/- or even more than that, you can give them the benifit of deducting PF only on Rs. 6500/- as per PF act.
Eg: An employee basic + DA salary is Rs. 10000 per month. So the PF contribution is 780/- per month (12% of 6500/- minimum PF wage). This will increase the take home of the employee.
From India, Pune
The PF is applicable on a minimum basic of Rs 6500/- per month. So if an employee's Basic + DA is 6500/- or even more than that, you can give them the benifit of deducting PF only on Rs. 6500/- as per PF act.
Eg: An employee basic + DA salary is Rs. 10000 per month. So the PF contribution is 780/- per month (12% of 6500/- minimum PF wage). This will increase the take home of the employee.
From India, Pune
That was a real help from all. I was extensively working on the restructure of my organisation's previous salary structure. Working on the same thing had troubled me a lot. I hope, I cud give a structure that cannot be challenged. One thing to clarify futher is, Minimum wages is applicable on CTC or Cash in hand.
From India, Chandigarh
From India, Chandigarh
Dear all,
Is there any fixed slab for fixing Basic.
Like 45% above on Gross .........
If there is no such kind of fixation at the time of recruitment only we can fix their Basic as low so that they can get good take home.
Clarify it........
Regards
UDAY
From India, Hyderabad
Is there any fixed slab for fixing Basic.
Like 45% above on Gross .........
If there is no such kind of fixation at the time of recruitment only we can fix their Basic as low so that they can get good take home.
Clarify it........
Regards
UDAY
From India, Hyderabad
Pls note: The org has every right to change its compensation and benefit policy as and when it deems necessary or fit. And if the structure (salary) so defined reduces the basic (thereby reducing the PF) then it is totally within the leagal parameter, the reason for this being - the employer is not getting / deriving any benefit from the said restrcturing of the salary and its the emplpyee at the end of day who is benefitting with extra cash in hand to spend.
Feel free to comment.
From United Kingdom, London
Feel free to comment.
From United Kingdom, London
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