Hi All,
I am a finance and a HR consultant. I am practising the following procedure:
This is a scenoria where the basic wages is more than Rs.6500/- and the employee opts to limit his contribution to Rs.6500/- i.e. 780/- against Pf and Rs.541/- against Family Pension fund.
Let us assume that his notional basic is Rs.20000/- and he joins in the middle of the month (say worked only for 15 days during the month of joining). His earned basic is Rs.10000/- and the software limits the contribution to Rs.6500/-, which in my opinion is wrong.
The basis should be on notional basic and not on earned basic. If you look at the way RPFC calculates, it is clearly based on work days and not on this logic. It is also clearly explained in the PF act.
same logic applies for a loss of pay also.
Can any of you tell me which one is right?
Thanks a lot,
Hema
From India,
17I am a finance and a HR consultant. I am practising the following procedure:
This is a scenoria where the basic wages is more than Rs.6500/- and the employee opts to limit his contribution to Rs.6500/- i.e. 780/- against Pf and Rs.541/- against Family Pension fund.
Let us assume that his notional basic is Rs.20000/- and he joins in the middle of the month (say worked only for 15 days during the month of joining). His earned basic is Rs.10000/- and the software limits the contribution to Rs.6500/-, which in my opinion is wrong.
The basis should be on notional basic and not on earned basic. If you look at the way RPFC calculates, it is clearly based on work days and not on this logic. It is also clearly explained in the PF act.
same logic applies for a loss of pay also.
Can any of you tell me which one is right?
Thanks a lot,
Hema
From India,
Hi Hema, Well, the basis should be on earned basic ...n same applies to loss of pay as well... Regards, Rajat
From India, Pune
From India, Pune
Hi Rajat,
Thanks for the reply.
1. Is there any notification for substantiating your view.
2. Consider this example : An employee whose 15 days basic is Rs.10000/- and based on "earned basic concept", we have contributed Rs.541/- to FPF (6500*8.33%). Your annual return will show the lop and the department will pay FPF only on 541*15/31 and not the entire amount. Explanation to this effect is clearly laid down in the act.
Therefore, it is clear that the basis should not be arrived after calculating earned basic but on notional figure.
Moreover, employees in some organisations are given the option to limit their contribution to Rs.780/- (12% of 6500) and this is done based on their master basic and not earned basic.
Even the clients accept it and reputed Organisations like "ADP" are following only the concept of notional basic. But, there is an issue with process capability and hence settle down to a logic that is easy to manage.
Regards,
Hema
From India,
Thanks for the reply.
1. Is there any notification for substantiating your view.
2. Consider this example : An employee whose 15 days basic is Rs.10000/- and based on "earned basic concept", we have contributed Rs.541/- to FPF (6500*8.33%). Your annual return will show the lop and the department will pay FPF only on 541*15/31 and not the entire amount. Explanation to this effect is clearly laid down in the act.
Therefore, it is clear that the basis should not be arrived after calculating earned basic but on notional figure.
Moreover, employees in some organisations are given the option to limit their contribution to Rs.780/- (12% of 6500) and this is done based on their master basic and not earned basic.
Even the clients accept it and reputed Organisations like "ADP" are following only the concept of notional basic. But, there is an issue with process capability and hence settle down to a logic that is easy to manage.
Regards,
Hema
From India,
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