Dear All, This is with regards to the recent Amendment which we received related to PF ceiling. (6500 to 15000). Because of this we are about to rework on the salary break up for our employees. When we are about to implement it one of the guy seek an advice from PF department. As per the concerned PF person statement "pertain to salary break ups whatever the gross salary which an employee receive should be considered for pf where 40% of HRA (Non Metro) could be exempted from it.
My Concern is as per law we need to deduct pf from the basic & DA and not with the gross. Also pertain to HRA it should be calculated from the basic and not from the DA. Could anyone of you give me a clarity on this so that we could implement it accordingly with immediate effect.
Request you to look into this and respond back at the earliest.
From India, Tiruchchirappalli
57My Concern is as per law we need to deduct pf from the basic & DA and not with the gross. Also pertain to HRA it should be calculated from the basic and not from the DA. Could anyone of you give me a clarity on this so that we could implement it accordingly with immediate effect.
Request you to look into this and respond back at the earliest.
From India, Tiruchchirappalli
Dear HR professional, Please note that Pf to be deducted only on Basic and DA not on any other component or gross.
From India, Surat
From India, Surat
To all my Friends whose basic salary is 6500 to 15000 & till now PF deductions not done in your CTC, Take home pay there Is an IMP news for you.
EPFO increased its coverage ceiling form 6500 to 15000.
With the increase of 6500 to 15000 EPF coverage ceiling the take Home money Pay of those employees who is having Basic Between 6500 to 15000 will surely get effected(those were not affected till Aug31) and their take home will get reduced.
12 %( Employee share) on Basic has to be paid to EPFO from the Employee side whose basic is 15000 & below. And another 12%Employer share also has to give it to EPFO means total 24% whether the employer share 12% will be calculated in the CTC or extra burden taken by the employer that’s depends upon the employee & employer job agreement.
This is a compulsory Indian social security act obligation to those employees who work in India. No one will get out of it.
CTC calculation is a pay agreement between individual employee & Employer it’s not a statutory obligation by the government. Only the minimum wage is the obligation by the Government.
Scenario 1: (CTC increased) 12% of Employee share will be detected form the employee that much of take home will be deducted from the employee another 12% share will be given by the employer which is add on burden to employer means the CTC got increased(happy to employees)
Scenario 2: (CTC not increased) CTC will get adjusted to the entire 24% EPF means both employee & employer share will get deducted from the employee’s CTC & it will be paid to EPFO whose basic is below 15000. That means on employees take home 24% will be deducted. (Gov will not interfere in this it make sure the minimum wage is (Basic) paid or not)
Note: EPFO will pay 8.75% Annual Interest on your EPF Money. It’s the best interest rate which you get in the present day be happy with this change.
From India, Hyderabad
EPFO increased its coverage ceiling form 6500 to 15000.
With the increase of 6500 to 15000 EPF coverage ceiling the take Home money Pay of those employees who is having Basic Between 6500 to 15000 will surely get effected(those were not affected till Aug31) and their take home will get reduced.
12 %( Employee share) on Basic has to be paid to EPFO from the Employee side whose basic is 15000 & below. And another 12%Employer share also has to give it to EPFO means total 24% whether the employer share 12% will be calculated in the CTC or extra burden taken by the employer that’s depends upon the employee & employer job agreement.
This is a compulsory Indian social security act obligation to those employees who work in India. No one will get out of it.
CTC calculation is a pay agreement between individual employee & Employer it’s not a statutory obligation by the government. Only the minimum wage is the obligation by the Government.
Scenario 1: (CTC increased) 12% of Employee share will be detected form the employee that much of take home will be deducted from the employee another 12% share will be given by the employer which is add on burden to employer means the CTC got increased(happy to employees)
Scenario 2: (CTC not increased) CTC will get adjusted to the entire 24% EPF means both employee & employer share will get deducted from the employee’s CTC & it will be paid to EPFO whose basic is below 15000. That means on employees take home 24% will be deducted. (Gov will not interfere in this it make sure the minimum wage is (Basic) paid or not)
Note: EPFO will pay 8.75% Annual Interest on your EPF Money. It’s the best interest rate which you get in the present day be happy with this change.
From India, Hyderabad
You have asked the pf department the wrong question at the wrong time.
There is a raging dispute about what is basic under the PF act.
There have been court decisions, specifically Rajasthan and more recently by Allahabad high court, which decided that allow allowances that are paid to all or group of employees every month and computed on a fixed basis, and not bring allowance specifically excluded (over time and HRA) is a part of basic. The Allahabad high court decision is very detailed and on premises that is likely to be upheld by Supreme Court.
The PF officer is considering that decision and giving his "advice" on that basis - take gross less HRA
However, in view of multiple contrasting decisions, the SC had taken all pending cases into its own jurisdiction and will give the final verdict. The PF department had issued a notification implementing the Allahabad HC decision, but that was later out on hold by the ministry in view of the pending SC decision.
So, under current rules, you have to pay pf on basic + da.
Having said that, please remember that the SC decision will be clarificatory in nature (not laying down the law, but clarifying that the law was all the time) and therefore applicable with retrospective effect.
From India, Mumbai
There is a raging dispute about what is basic under the PF act.
There have been court decisions, specifically Rajasthan and more recently by Allahabad high court, which decided that allow allowances that are paid to all or group of employees every month and computed on a fixed basis, and not bring allowance specifically excluded (over time and HRA) is a part of basic. The Allahabad high court decision is very detailed and on premises that is likely to be upheld by Supreme Court.
The PF officer is considering that decision and giving his "advice" on that basis - take gross less HRA
However, in view of multiple contrasting decisions, the SC had taken all pending cases into its own jurisdiction and will give the final verdict. The PF department had issued a notification implementing the Allahabad HC decision, but that was later out on hold by the ministry in view of the pending SC decision.
So, under current rules, you have to pay pf on basic + da.
Having said that, please remember that the SC decision will be clarificatory in nature (not laying down the law, but clarifying that the law was all the time) and therefore applicable with retrospective effect.
From India, Mumbai
Hi Mohan,
My question to you is, why do you want to change the Paystructure becuase of the increase in PF ceiling from 6500 to15000? as there is no effect to an employee salary, only effect will be there to the employer admin charges(Increse EDLI contribution) below is the explanatory caliculations.
EDLI will be calculated 0.5% on Pension wage, currently Rs 6500, if it is increased to Rs 15000, need to calculate 0.5% on Rs 15000 and even it is applicable for admin charges of EDLI 0.01% on Rs 15000.
Due to this, impact will be there on employer EDLI contributions.
1.difference amount would be added to EPF amount of 3.67% same as before.
If Basic is Rs 20000/- (Greater than Rs 15000)
EPF Contribution from Employee : Rs 2400 (12% on Basic 20000)
EPS Contribution from Employer : Rs 1250 (8.33% on maximum limit Rs 15000*)
EPF Contribution from Employer : Rs 1150 (3.67% on 20000 + diff amount of 416)
2.If the Basic salary is less than Rs 15000, then Pension Contribution would be 8.33% on Basic and Pf Contribution from the employer would be 3.67% on Basic, there will not be any difference amount to add the value to EPF (3.67%)
If Basic is 10000/- (Less than Rs 15000)
EPF Contribution from Employee : Rs 1200 (12% on Basic 10000)
EPS Contribution from Employer : Rs 833 (8.33% on Basic 10000)
EPF Contribution from Employer : Rs 367 (3.67% on basic 10000)
As new EPF notification is applicable from Sep1st 2014 onwards, and Payroll process will done after Sep 30th, hope you will have time to take decission to change teh Paystructure.
Kindly share teh reason to change the Pay Structure when there is no effect.
From India, Visakhapatnam
My question to you is, why do you want to change the Paystructure becuase of the increase in PF ceiling from 6500 to15000? as there is no effect to an employee salary, only effect will be there to the employer admin charges(Increse EDLI contribution) below is the explanatory caliculations.
EDLI will be calculated 0.5% on Pension wage, currently Rs 6500, if it is increased to Rs 15000, need to calculate 0.5% on Rs 15000 and even it is applicable for admin charges of EDLI 0.01% on Rs 15000.
Due to this, impact will be there on employer EDLI contributions.
1.difference amount would be added to EPF amount of 3.67% same as before.
If Basic is Rs 20000/- (Greater than Rs 15000)
EPF Contribution from Employee : Rs 2400 (12% on Basic 20000)
EPS Contribution from Employer : Rs 1250 (8.33% on maximum limit Rs 15000*)
EPF Contribution from Employer : Rs 1150 (3.67% on 20000 + diff amount of 416)
2.If the Basic salary is less than Rs 15000, then Pension Contribution would be 8.33% on Basic and Pf Contribution from the employer would be 3.67% on Basic, there will not be any difference amount to add the value to EPF (3.67%)
If Basic is 10000/- (Less than Rs 15000)
EPF Contribution from Employee : Rs 1200 (12% on Basic 10000)
EPS Contribution from Employer : Rs 833 (8.33% on Basic 10000)
EPF Contribution from Employer : Rs 367 (3.67% on basic 10000)
As new EPF notification is applicable from Sep1st 2014 onwards, and Payroll process will done after Sep 30th, hope you will have time to take decission to change teh Paystructure.
Kindly share teh reason to change the Pay Structure when there is no effect.
From India, Visakhapatnam
Dear Mr. Pavan Kumar,
With reference to your reply, a small doubt
If Basic is Rs 20000/- (Greater than Rs 15000)
EPF Contribution from Employee : Rs 2400 (12% on Basic 20000) its not mandatory, employer can limit to 1800/- only (12% on 15000)
EPS Contribution from Employer : Rs 1250 (8.33% on maximum limit Rs 15000*)
EPF Contribution from Employer : Rs 1150 (3.67% on 20000 + diff amount of 416) its not mandatory, employer can limit to 551/- only (3.67% on 15000)
Please let me know, If I am wrong.
T.Prathap,
HR Executive, Human Resource Department,
R L Jalappa Narayana Heart Centre,
Mobile:8884291530.
From India, Madras
With reference to your reply, a small doubt
If Basic is Rs 20000/- (Greater than Rs 15000)
EPF Contribution from Employee : Rs 2400 (12% on Basic 20000) its not mandatory, employer can limit to 1800/- only (12% on 15000)
EPS Contribution from Employer : Rs 1250 (8.33% on maximum limit Rs 15000*)
EPF Contribution from Employer : Rs 1150 (3.67% on 20000 + diff amount of 416) its not mandatory, employer can limit to 551/- only (3.67% on 15000)
Please let me know, If I am wrong.
T.Prathap,
HR Executive, Human Resource Department,
R L Jalappa Narayana Heart Centre,
Mobile:8884291530.
From India, Madras
Mr. Pratap,
There is no mandatory to caliculate 12% on actual basic(Incase of more than 15000). We can limit to 15000 or if employer wants to benefit to the eployee as per their policy they can calculate on actuals.
The example I have taken is from the organization where I am working now is paying on actuals.
Thanks & Regards,
Pavankumar P
From India, Visakhapatnam
There is no mandatory to caliculate 12% on actual basic(Incase of more than 15000). We can limit to 15000 or if employer wants to benefit to the eployee as per their policy they can calculate on actuals.
The example I have taken is from the organization where I am working now is paying on actuals.
Thanks & Regards,
Pavankumar P
From India, Visakhapatnam
Please tell us who can conduct training in tamil on boring of repeated work, working for 25 years Training to avoid body ache for the workmen who are old 45 to 50 years
From India, Pondicherry
From India, Pondicherry
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