In our company, PF payable amount is calculated based on 80% of the basic salary for the years from September 2014 to December 2016. After calculating, the basic salary is set at 50% for the year 2017. Is there any issue with creating this setup? We currently have an employee whose salary has surpassed Rs. 2,50,000 with a basic and DA at 60%. Below Rs. 2,50,000, the basic and DA are at 50%. How can we solve this issue? Is there a standard rule to follow regarding the percentages of 50%, 60%, or 80%? Kindly advise.
From India, Coimbatore
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4From India, Coimbatore
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Dear Dhana,
There is no such rule of following 40-50-60-80% of salary as basic. The basic thing that you need to understand and implement is the minimum wages for your state. You need to make sure that the basic wages paid by you should not be less than what is specified in the minimum wages. If you are not paying DA, then the basic should be basic + DA as mentioned in the Minimum Wages Act.
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There is no such rule of following 40-50-60-80% of salary as basic. The basic thing that you need to understand and implement is the minimum wages for your state. You need to make sure that the basic wages paid by you should not be less than what is specified in the minimum wages. If you are not paying DA, then the basic should be basic + DA as mentioned in the Minimum Wages Act.
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Splitting of minimum wages for PF in abeyance (1).pdf