Dear all ,
Please let me know that is there any amendment in such a way
that the Basic + DA should be at least 60% of the gross salary ?
Secondly those who are drawing more then 15k basic + Da , their
entire contribution should go EPF and not EPS ?
Please put focus on the above.
Thanks and regards
Rajeev Dixit
From India, Bangalore
111Please let me know that is there any amendment in such a way
that the Basic + DA should be at least 60% of the gross salary ?
Secondly those who are drawing more then 15k basic + Da , their
entire contribution should go EPF and not EPS ?
Please put focus on the above.
Thanks and regards
Rajeev Dixit
From India, Bangalore
Dear Rajiv,
Please find ans on your first query is as follows: As such there is no standard rule and amendment available in the labour law legislations, each company is having their own standard salary structure by which they can manage their internal employee bands.
Secondly if you refer PF act, the EPS always calculated on the ceiling of 6500 on his basic salary even if an employee is earning more than 6500.
For example: An employee Basic+DA is 12000/- in such scenario his EPS would be calculated on (6500*8.33%)= 541/-
& His EPF would be calculated either on actual basic (12000*12%)= 1440-541= 899/- or on ceiling of Rs. 6500 ie EPF= (6500*12%= 780-541= 239/-.
If you observe the above example the calculation of EPS would be same and it restricts on or below 541/-, but where as EPF, its arrives after calculation of EPS.
Regards,
Janardan
From India, Mumbai
Please find ans on your first query is as follows: As such there is no standard rule and amendment available in the labour law legislations, each company is having their own standard salary structure by which they can manage their internal employee bands.
Secondly if you refer PF act, the EPS always calculated on the ceiling of 6500 on his basic salary even if an employee is earning more than 6500.
For example: An employee Basic+DA is 12000/- in such scenario his EPS would be calculated on (6500*8.33%)= 541/-
& His EPF would be calculated either on actual basic (12000*12%)= 1440-541= 899/- or on ceiling of Rs. 6500 ie EPF= (6500*12%= 780-541= 239/-.
If you observe the above example the calculation of EPS would be same and it restricts on or below 541/-, but where as EPF, its arrives after calculation of EPS.
Regards,
Janardan
From India, Mumbai
Dear Janardan ji,
EPS limit is also now increased on wages upto Rs. 15000. 8.33% of the employer contribution of this limit shall go for EPS. Any additional amount of contribution will go towards EPF Only.
As regarding query of Mr. Rajeev,
There is no standard rule that Basic + DA shall not be less than 60% of total salary. But due to wage ceiling enhancement in PF Act, PF department is making due enquiries to collect information about the employer who structure salary in such a way that their PF costs is reduced, and this is done by adding unnecessary allowances to the salary and keeping BASIC+ DA much lower.
Suppose Gross salary to be provided to an employee is Rs. 20000 per month. Employers structure it as 6000 or 7000 basic + 50% DA i.e. 3000 or 3500 and other allowances at Rs. 11000 or 9500. This is not a good practice. as this system reduces the PF contribution though the employee keeps on taking higher amount as salary.
Thats why Basic + DA alongwith other allowances shall be reasonable enough and shall not seem inflated.
From India, Gwalior
EPS limit is also now increased on wages upto Rs. 15000. 8.33% of the employer contribution of this limit shall go for EPS. Any additional amount of contribution will go towards EPF Only.
As regarding query of Mr. Rajeev,
There is no standard rule that Basic + DA shall not be less than 60% of total salary. But due to wage ceiling enhancement in PF Act, PF department is making due enquiries to collect information about the employer who structure salary in such a way that their PF costs is reduced, and this is done by adding unnecessary allowances to the salary and keeping BASIC+ DA much lower.
Suppose Gross salary to be provided to an employee is Rs. 20000 per month. Employers structure it as 6000 or 7000 basic + 50% DA i.e. 3000 or 3500 and other allowances at Rs. 11000 or 9500. This is not a good practice. as this system reduces the PF contribution though the employee keeps on taking higher amount as salary.
Thats why Basic + DA alongwith other allowances shall be reasonable enough and shall not seem inflated.
From India, Gwalior
Mr.Janardhan,
Your opinion is correct but you are very well aware that the wage ceiling is increased from Rs,6500 to 15000 with effect from 1st September, 2014 by the EPFO. As far as calculations are concerned your explanation is correct. The limit upto Rs.15000. Employees drawing the salary basic and DA less than 15000 the employers contributions towards EPS will be @ 8.33% and remaining will go to EPF Employees drawing more than the 15000 the limit is applicable.
In this regards since from the date of amendment of the scheme every day the same questions are being raised by the readers in different way. But the answer is the same for all the query. Peoples must go through with the amendments and then only can raise the query or seek the opinion.
Adoni Suguresh
Sr.,Executive (Pers, Admin & Ind.Rels) Rtd
Labour Laws Consultant
From India, Bidar
Your opinion is correct but you are very well aware that the wage ceiling is increased from Rs,6500 to 15000 with effect from 1st September, 2014 by the EPFO. As far as calculations are concerned your explanation is correct. The limit upto Rs.15000. Employees drawing the salary basic and DA less than 15000 the employers contributions towards EPS will be @ 8.33% and remaining will go to EPF Employees drawing more than the 15000 the limit is applicable.
In this regards since from the date of amendment of the scheme every day the same questions are being raised by the readers in different way. But the answer is the same for all the query. Peoples must go through with the amendments and then only can raise the query or seek the opinion.
Adoni Suguresh
Sr.,Executive (Pers, Admin & Ind.Rels) Rtd
Labour Laws Consultant
From India, Bidar
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.
Lost Baby Information-ver y urgent.doc
Urgent vs Important work.xls