Hi, as per our current salary structure, basic/HRA/CCA/conveyance/other allowances are the salary components, and PF 12% is deducted only from the basic salary. As per the understanding, PF is to be deducted from basic and DA, whereas we don't have a DA component; it is deducted from only the basic. The basic salary, as per the structure, is approximately 35-40% of total earnings.
Recently, we had an inspection by the PF office and a query was raised as to why we are deducting PF only from the basic and not from other allowances. In this regard, the following information could help in dealing with the PF office. Request to please provide your inputs:
1) Is there any stipulated method/percentage of total earnings, etc., for basic salary calculation?
2) Is there any rule that PF should be deducted from all salary components and not only from basic and DA?
3) Is there any ruling, etc., to substantiate the claim of PF deduction applicable only from basic and DA, etc.?
Kindly help.
From India, Bangalore
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3Recently, we had an inspection by the PF office and a query was raised as to why we are deducting PF only from the basic and not from other allowances. In this regard, the following information could help in dealing with the PF office. Request to please provide your inputs:
1) Is there any stipulated method/percentage of total earnings, etc., for basic salary calculation?
2) Is there any rule that PF should be deducted from all salary components and not only from basic and DA?
3) Is there any ruling, etc., to substantiate the claim of PF deduction applicable only from basic and DA, etc.?
Kindly help.
From India, Bangalore
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any payout to employee which is regular in nature, Excluding HRA and medical is considered eligible for EPF,
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My gross salary is 25000 what is my basic salary and can i. Will eligible for pf deduction
From India , Gurgaon
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From India , Gurgaon
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@ashok,
How can a third party analyze the salary structure of any company or its employees? It depends on the company policy. The department can ask for the rules to be complied with only.
If you have any specific queries on the issue, post here to get a reply.
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How can a third party analyze the salary structure of any company or its employees? It depends on the company policy. The department can ask for the rules to be complied with only.
If you have any specific queries on the issue, post here to get a reply.
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Sir The easy way to calculate PF would be Consider 70% gross as eligibility. Example: If 10000 Rupees is the salary 70% would be 7000 Rupees. Calculate 12% on 7000 Rupees only.
From India, Chennai
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From India, Chennai
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Hi,
PF is deducted not only from the basic salary, which includes other components like food, conveyance, and other allowances, except HRA up to a maximum of 15000/- as per the PF rules. PF inspection has been conducted in our company, and the PF authority has instructed us to adhere to the same rule that has been followed thereafter.
Satya Nagaboyana
nsatyahr@gmail.com
From India, Hyderabad
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PF is deducted not only from the basic salary, which includes other components like food, conveyance, and other allowances, except HRA up to a maximum of 15000/- as per the PF rules. PF inspection has been conducted in our company, and the PF authority has instructed us to adhere to the same rule that has been followed thereafter.
Satya Nagaboyana
nsatyahr@gmail.com
From India, Hyderabad
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Please refer to <http://esewa.epfoservices.in/faq.php> to get a comprehensive idea about the Employees' Provident Fund. The spirit of this scheme must also be applicable to any other PF scheme the company may choose to subscribe to.
The following extract from the webpage may answer the question:
"43. WC.7: What is the amount of wages to be considered for PF contributions?
PF Contribution is payable on all emoluments payable in cash to an employee during the month excluding the following:- (i) House Rent Allowance (ii) Overtime Allowance (iii) Bonus (iv) Commission or any other similar allowance; and (v) Any presents made by the employer."
You can avoid a lot of headaches with PF inspection if you keep as many employees as possible above the PF ceiling of Rs 15,000/-. The government's agenda is to turn PF into some kind of social security scheme by somehow including all citizens in its ambit. We can't fight the system for too long. The best option is to include employer contributions in CTC. Also, HR managers tend to help employees get income tax exemptions by showing as much HRA as possible in the salary breakup. That may help the employee but not the employer. Let employees do their tax planning on their own.
From India, Bangalore
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The following extract from the webpage may answer the question:
"43. WC.7: What is the amount of wages to be considered for PF contributions?
PF Contribution is payable on all emoluments payable in cash to an employee during the month excluding the following:- (i) House Rent Allowance (ii) Overtime Allowance (iii) Bonus (iv) Commission or any other similar allowance; and (v) Any presents made by the employer."
You can avoid a lot of headaches with PF inspection if you keep as many employees as possible above the PF ceiling of Rs 15,000/-. The government's agenda is to turn PF into some kind of social security scheme by somehow including all citizens in its ambit. We can't fight the system for too long. The best option is to include employer contributions in CTC. Also, HR managers tend to help employees get income tax exemptions by showing as much HRA as possible in the salary breakup. That may help the employee but not the employer. Let employees do their tax planning on their own.
From India, Bangalore
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Hi, thanks to all for the inputs on the above discussion. It was to re-confirm how it can be followed in a better way with less employer liability. Thanks a lot.
From India, Bangalore
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From India, Bangalore
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Dear Sir,
Is 25000/- gross or CTC? The basic ratio is typically 40-60%. Could you please confirm the ratio of your company? If your company's basic ratio is 40%, then it would be calculated as follows: 25000 * 40% = 10,000/-
If you have any queries, feel free to contact me at 8901103089.
Regards,
Suresh Sharma
From India, Pune
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Is 25000/- gross or CTC? The basic ratio is typically 40-60%. Could you please confirm the ratio of your company? If your company's basic ratio is 40%, then it would be calculated as follows: 25000 * 40% = 10,000/-
If you have any queries, feel free to contact me at 8901103089.
Regards,
Suresh Sharma
From India, Pune
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Dear All,
Our salary structure contains the following components:
- Basic: 40% of CTC
- DA: 10% of Basic
- HRA: 40% of Basic
- Medical: 1500 PM
- Conveyance: 1600 PM
- Education Allowance: 200 PM
- Rest in other Allowances
Please clarify on which of the above-stated components the PF would be chargeable.
Regards,
Amit
From India, Jaipur
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Our salary structure contains the following components:
- Basic: 40% of CTC
- DA: 10% of Basic
- HRA: 40% of Basic
- Medical: 1500 PM
- Conveyance: 1600 PM
- Education Allowance: 200 PM
- Rest in other Allowances
Please clarify on which of the above-stated components the PF would be chargeable.
Regards,
Amit
From India, Jaipur
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PF Contribution on Leave Encashment - Clarification by EPFO.pdf