Definition Of Basic Salary For The Purpose Of Pf - PDF Download - CiteHR
Adoni Suguresh
Sr.executive (per & Adm)
Sunil Purohit
Manager-administration
Devender.hr
Human Resource
+1 Other

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Dear colleagues,

I would like to seek your expert view on the issue that we are currently dealing. As per our current practice we were deducting PF on the max. basic of Rs. 6500/-. However as per new PF enhancement, now PF deduction will be max. on basic of Rs. 15,000/-. Here we have the Salary break as per the following:-

A) Basic Salary

B) HRA

C) CCA

D) Conveyance Allowance

E) Special Allowance

We are currently considering the basic salary only for PF calculation, now I came to know about the case decision (MP High court' 2011) where it was clearly mentioned that the PF will attract on all the allowances other than HRA i.e. (Basic + Conveyance Allow. + CCA+ Spl. Allow.). But as per my understanding it is still not clear (means under dispute).

In this context, I would like to understand the following:-

1. Is it in case where minimum wage is less than the basic or will it be in all cases? (PF on all allowances other than HRA)

2. As per my understanding, while ascertain the minimum wages it will be on basis of Gross Salary (include the basic+ all allowances).

I will be highly obliged, if you all may please clear my doubt on the above.

With Best,

DKS

Dear Devendarji, Forwarding a copy of circular clarifying most of your points.

Attached Files
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File Type: pdf PF not applicable on CTC 18.3.2014.pdf (530.4 KB, 2286 views)

Thanks Purohit ji, for your valued inputs, where circular clearly stated that PF will attract on Basic wage only.
However I am in anticipation of some more suggestions on the discussed topic from my other senior colleagues like Purohit ji.t
With best
DKS

Hi
There is another question on the latest increase from Rs.6500/- of Rs.15000/-
If an employee has salary of more than Rs.40,000/- per month and his basic is only Rs.10,000/- (remaining amount of his salary is adjusted towards HRA, Conveyance, Special Allowance etc...). Now as per the new amendment do we need to enhance his basic pay to minimum Rs.15000/- ?
Kindly share your opinion at the earliest
Regards,
Jyothi

Hi
Jyothimala
Your query is advised as under :-
You can split his salary of Rs.40000 as per following formula.
1. Basic salary 50 % .. 20000
2. HRA 25 % 10000
3. Conveyance 15 % 6000
4. Spl.Allowance 10 % 4000
Now you can calculate his Provident Fund on Rs.15000 as per ceiling @ 12 % or actual basic salary at management discretion. Whether to restrict to ceiling or not.
This is the formula where most of the establishments are being followed. Contributing the Provident Fund above ceiling or at actual basic salary is also accepted by the EPFO. Because of this you need not to bring his basic salary for Rs.15000 as there is option for contributing as per recent notification issued by EPFO from 1st Sep, 2014.
Adoni Suguresh
Sr.Executive (Pers, Admin & Ind.Rels) Rtd
Labour Laws Consultant

How can i comply pf compliance by not contributing epf. Pl. Suggest
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