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PF Limit

mahesh1star Started The Discussion:

Hi please clarify the doubt on pf
if Basic+DA is 20,000.PM then PF will be claculated on 6500 basis or 20,000 basis
if company is ready to pay on actual basic+da then what should be the break up

Thanks
Mahesh

kishorkulkarni - Contributing Member
The Ceiling of Salary of Rs. 6,500 pm has now become a mere figure in the books. It is under proposal to enhance this limit to 10,000 pm which will be made sooner or later. There are 2 ways to make this. The problem is generally with the employer's contribution and every employer wants to restrict to the present limit i. .e 6,500 pm only. In such a case, Basic + DA should be just to the limit and rest are paid by way of allowance. Second way is to consider a certain amount say Rs. 10,000 out of the total salary on which PF contributions can be paid and the rest amount is paid as allowances. This has benefits to employee, as more saving to PF from own salary and also employer's contribution up to Rs. 10,000. What you save today helps you in future. I have always suggested this method to many employers and that's working fine.

Thanks
in Second way if we calculated on 10000 then PF is 1200 that means Pension scheme of 8.33% is comes to 833 but some body saying that pension scheme is limited to 541 what we can to for balance amount

bcarya - Contributing Member
Dear Mahesh,
The EPF Contribution in Pension Account goes upto maximum 8.33% of the current wages ceiling, i.e. Rs. 6500/-. Which clearly means that the highest contribution in pension account is Rs. 541/- as per current wages ceiling.

The balance amount of the contribution (1200-541=659) Rs. 659/- will go to A/c 1.

Hope the doubt may be clear.

kishorkulkarni - Contributing Member
The above calculations are correct. The amount over and above Rs. 541 of employer's contribution (ie. Rs. 659 in our case) goes to Account No. 1 that is Employees share of PF. Thus a total of 1200 + 659 will be added in that account.

Dear Mr. Mahesh,

Best solution to your problem is by increasing your contribution 12% to 20% (voluntary) with the permission of the employer. Employer's burden will be administrative charges of the contribution which shall be very meager. During my tenure of employment, (around 23 years) Company was contributing @ 10% (8.33% + 1.67%) & whereas my contribution was 20%(8.33% + 11.67%) which has benefits me at the time of my retirement.

You can talk to your employer by considering your case, which will be beneficial to you in the long run.

Regards.

Ravi

Hello Sir,

In my company we have pay structure is as forllow:

Basic + HRA + Conveyance + Spl. Allowance

we are deducting pf on only Basic at @ 12%

we want to know Spl. Allowance will attract any PF deduction ?

Please clear our doubt.

vijay

kishorkulkarni - Contributing Member
Dear Vijay
Generally Special Allowance is meant to compensate the cost of dearness. In your case the SA you referred to is to take care of dearness, then certainly it will attract PF. Not only that, conveyance allowance is also attractable in view of the circular PF has issued last year. However, the all total of salary is crossing Rs. 6,500 (excluding HRA), then PF is payable (at present) upto Rs. 6,500 only and anything above it is left open.

HR topics - 
Dear Mr.Kishore,

I have the following doubts and would request for clarifications :

1. Whether payment of DA + VDA is compulsory alongwith Basic Salary ? Suppose, if we do not pay DA and or VDA then how to bifurcate the Salary Structure ? Once we pay the Fixed DA is it necessary to pay VDA also.

2. Whether ceiling payment of Rs.6,500/- could be taken as base for PF eligibility (Basic + FDA) ) and rest on other allowances ?

3. what allowances could be paid which would not attract PF ?

Could you please send a copy of the circular notified by PF authorities, wherein the Conveyance Allowance is attractable.

regards,

V.Kali Prasad

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