Industrial Relations And Labour Laws
Sr. Hr Team Member
Aashiema Saxena
Assistant Manager - Hr
Personnel Officer
Private / Accounts Asst.
Office Superintendent
+5 Others

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Hi All,
I need some clear explaination regarding arrears.My questions are given below:
1.If there is arrear calculation involved in the company, how would PF & ESI deductions on arrears be calculated?
2.How to specify about ESI/PF deducted on arrears in monthly, half yearly & yearly returns?
3.Should we submit PF forms separetly for the Arrears amount or should we give reports for the amount obtained by summing current Basic+DA+arrears on Basic+ Arrears on DA?

Kindly explain with examples.

Thanks in Advance.

If you give arrears of salary this month, deduct PF/ ESI at the prescribed rates (12%/1.75%) from the arrears and pay it. The additional PF/ESI so deducted shall be deposited along with regular contributions. In the returns, show the total salary (salary for the month + arrears) as salary for the month and also show the total contribution (usual contribution + additional contribution for the arrears of salary) as contribution for the month. There is nothing wrong if the salary and the contribution for the next month is less than current month. You can put a remark to this effect in the returns.

Dear Madhu, If we pay the arrears separately and also mentioned separately in the returns form3a. if there is any penalty raise by the govt. Please clarify me. Thanking you
There will be no interest or penalty provided the PF for the arrears is paid within 15 days of its payment. You can show the salary arrears and PF contributions thereon separately also. But the form 3 A has only 12 rows to show monthly salary and contributions for 12 months only. Therefore, it is advisable to club the arrears with salary of the month in which it was paid.

Dear Madhu
Thank you for your reply.
We had received one access file which is sent by the pf office which for preparing form 3a and 6a. In this database it have 13 rows. We asked them what is the purpose for 13th row. They replied that is for arrears or any other payment given to the employee.
So we taken that database format and we derived the same format in our payroll program.
Please Give Me the reply.
Thank you once again

In soft copies either in excel or access forms it is possible to add any number of rows to show arrears separately and, therefore, you can prepare it in the same format. Go ahead. Regards, Madhu.T.K
Dear Madhu Sir,
Today, when PF is submitted online then how to calculate PF on arrear. Suppose One employee basic salary is 6500 and he gets Rs 1000 as a increment. Then what will be the total PF deduction in this case. Will it be 6500*12% + 1000*12% or anything else.
Dinesh Kumar

If your practice is to give contribution on salary above Rs 6500 also, then it will be 12%on 7500, otherwise it will be restricted to 12%on 6500 only. You need not pay PF on arrears as PF qualifying salary has exceeded Rs 6500.

Madhu Sir,
Please reply asap of the following query:
Suppose, PF limit is only Rs. 6500 and we are deduction on 6500. Now if any employee previous basic salary is 6000 and now his basic salary is increased by 1000 in the month of May 14 which is applicable form the month of April 14. Now his basic salary is Rs. 7000. Then how much PF will be deducted from the salary including arrear of previous month.Will it be 12% of 6500 + (12% of 500 or 12% of 1000). Sir, Please reply asap.
Dinesh Kumar

Dear Dinesh, In your case you need to pay 12% on Rs. 500 however your company follows wage exceed limit of Rs. 6500/- Regards, Janardan

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