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In continuation of my last Article ‘Implication of Supreme Court Verdict on Provident Fund‘ published on 2nd March, 2019 on PF calculation after verdict of Hon’ble Supreme Court Judgment, the following illustration will help you to understand that how to calculate salary for PF deduction and extra cost you have to bear as Employer:
Calculation of Eligible amount at which Provident Fund (PF) should be Deducted after Supreme Court Ruling
|
% |
Emp. 1 | Emp. 2 | Emp. 3 |
Em. 4 |
|
| GROSS SALARY | 12500 | 14900 | 30000 | 45000 | |
| 0 | 0 | 0 | 0 | ||
| Basic | 40% | 5000 | 5960 | 12000 | 18000 |
| HRA (60% of Basic) | 24% | 3000 | 3576 | 7200 | 10800 |
| Medical Allowance | 800 | 800 | 1500 | 3000 | |
| Conveyance | 1200 | 1200 | 2500 | 6000 | |
| Travel Allowance | 3000 | 5000 | |||
| Canteen Allowance | 2000 | 2000 | 0 | ||
| Lunch Incentive | 500 | 1200 | 0 | ||
| Other Allowance | 164 | 3800 | 2200 | ||
| GROSS FIXED SALARY | A | 12500 | 14736 | 30000 | 45000 |
| Overtime | 10000 | 8500 | 0 | 0 | |
| Variance Bonus related to pieces stitched over regular production | 2500 | 4500 | 0 | 0 | |
| GROSS VARIABLE PAY | B | 12500 | 13000 | 0 | 0 |
| GROSS TOTAL EARNING | C=A+B | 25000 | 27736 | 30000 | 45000 |
| SALARY FOR PF CALCULATION | 12500 | 14736 | 30000 | 0 | |
| Employee Contribution | 12% | 1500 | 1768 | 3600 | 0 |
| Employer Contribution new employees if registered with PMRPY up to 31/03/2019 | 12% | 1500 | 1768 | 3600 | 0 |
| Employer Contribution – Normal | 13% | 1625 | 1916 | 3900 | 0 |
| Earlier Employer Cost | 13% | 650 | 775 | 1560 | 0 |
| Extra Cost | 975 | 1141 | 2340 | 0 |
Here in case of Employee 1, 2 & 3 all have Basic Salary is below 15000 therefore they are covered under PF deductions. Further, as per Supreme court ruling for calculation purposes all special additional allowances shall be treated as part of calculation, IF BASIC IS UP TO 15000/- but excluding pure variable salary which can be correlated with work production or extra time.
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Why we calculate the pf excluding hra
NO 15000 CAN NOT BREAK FURTHER
As per new ruling you can not break 15000 if it is above then possible; Actually court said anything if paid on regular basis by any name up to 15000 can not be break but no such order effect gave at PF site so employers are doing at their sweet will.
Sir,
My Gross Salary is 15000/-, but our employer has deducting epf (employee) contribution is Rs.780/- Only. It is correct / Wrong.
Basic: 6500/-
H.R: 3620/-
Medical Allowance: Rs.2250/-
Traveling Allowance Rs.2630/-
It is correct or / wrong kindly advice.
there will be no impact if we put all other allowances in HRA. can we do so? or is here any percentage fix between basic and HR?
In your table, you show the first column as a percentage without heading, which column it is?
In case a employee salary constitutes ie Basic-Rs.7800/-,HRA 3900 and Other allowance Rs.1800. Do we need to pay PF of 12% for the total salary ie Rs.13500/- or can we calculate from lesser amount ie 60% or 80% of the total salary. Whether it is allowed under the PF rules. Kindly clarify
Hi ,
All our employees Basic is more than 15000 , We follow unrestricted pf of 12% on basic.
Do we need to deduct EPF on Basic + Medical +Conveyance + Special Allowance or only on Basic as all employees Basic is more than 15000.
Please advice
Can be consider HRA is an excluded for PF if the gross salary is less than 15,000/- per month. Example: Basic Salary-8000/-, HRA-4000, Medical Allowance-1000/- and Conveyance – 2000/-. Here, what is the procedure of PF deduction. Please let me answer.
Is it right to assume if the Basic Pay is more than 15000/- the Employer and employee contribution can be limited to 12% of the basic pay .
Salary for PF in second case should be 14900 and not 14736. Any Resons ?
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