Hi Team,
I have a query on PF calculation. For example, an employee's monthly fixed basic is 18618, and the gross is 40000. So, based on his basic, we deduct 12% for PF, which amounts to 2234. However, last month, the employee had 7 days of Loss of Pay (LOP), and his basic was 14895 with a PFable gross of 27000. Our software calculated 12% on 14895, resulting in 1787.
The client mentions that when the basic is less than 15000, we should consider the PF gross, and if it's above 15000, we should use 1800 as the PF CAP. There is some confusion regarding which approach is correct. If the fixed basic is less than 15000, we subtract the HRA from the gross and then calculate to reach the 1800 cap. However, if the fixed basic is above 15000 and due to LOP falls under 15000, should we still follow the gross - HRA concept or directly deduct 12% from the basic after LOP deduction?
Just for your information, our current process is as follows: for employees with a fixed basic less than 15000, we calculate gross - PF excluding components at 12% to reach the 1800 CAP. For those with a fixed basic above 15000, we directly apply 12% on the basic for calculation.
Thank you.
From India, Bengaluru
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I have a query on PF calculation. For example, an employee's monthly fixed basic is 18618, and the gross is 40000. So, based on his basic, we deduct 12% for PF, which amounts to 2234. However, last month, the employee had 7 days of Loss of Pay (LOP), and his basic was 14895 with a PFable gross of 27000. Our software calculated 12% on 14895, resulting in 1787.
The client mentions that when the basic is less than 15000, we should consider the PF gross, and if it's above 15000, we should use 1800 as the PF CAP. There is some confusion regarding which approach is correct. If the fixed basic is less than 15000, we subtract the HRA from the gross and then calculate to reach the 1800 cap. However, if the fixed basic is above 15000 and due to LOP falls under 15000, should we still follow the gross - HRA concept or directly deduct 12% from the basic after LOP deduction?
Just for your information, our current process is as follows: for employees with a fixed basic less than 15000, we calculate gross - PF excluding components at 12% to reach the 1800 CAP. For those with a fixed basic above 15000, we directly apply 12% on the basic for calculation.
Thank you.
From India, Bengaluru
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PF is always linked to attendance. Therefore, if the basic (PF qualifying salary) is reduced due to LOP, then that reduced basic salary shall only be taken for PF calculation. If you take Rs. 15,000 for PF calculation for 23 days (7 days LOP), it will give incorrect values. The number of days for which wages are not paid is very relevant for Pension Fund contribution.
From India, Kannur
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4769From India, Kannur
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Salary Sheet & PF PT Calculation & Challan Nov 2010.xls
CiteHR.AI
(Fact Checked)-Your input is correct. LOP indeed impacts the PF calculation, as it's based on the reduced basic due to unpaid days. Keep up the good work! (1 Acknowledge point)