PF Deduction - Pf Deductions [Thread 546171] - CiteHR
Saswatabanerjee
Partner - Risk Management
Kumaran Praveen
Hr-executive
+1 Other

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Dear Sir,

Suppose an Employee Basic for April is Rs. 15364 on which 1800 PF is paid. Now due to increment we are paying Salary of Rs. 12350 of May basic (there is leave so the salary is less) + Arrear of Rs. 4000 of April Paying with May Salary.
What will be the PF deduction in May
Note : Assuming Employee will continue with PF even after increase subject to maximum statutory limit.
Three method :
1) Here we are going by logic that PF will be recalculated for April and Difference amt will be paid in May. Hence the calculation will be
PF on May Salary of Rs. 12350 = Rs. 1482 + PF on Arrear = 0 * = Total Rs. 1482

*No PF on Arrear calculation = (15364+4000= 19364,On which Max PF of Rs 1800 is already paid)

2) 2nd Method : PF of May Salary = 1482 + Pf on Arrear (Straight Calculation) 4000*12% = 480
= Total PF deduction 1962

3) 3rd Method : PF for the month of May = (12350 + 4000(Arrear))=16350
PF = 12% on 15000 (Max) = 1800

Now pls suggest which is correct and what will be adjustment in EPS

Regards
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Hi Mr.Ali,
For the month of April you paid PF contribution for 15,000 Rs (Basic+DA) which is the maximum ceiling according to the legislation hence for the month of May you have to take the employee Basic+DA alone according to you it is 12,350 Rs so PF contribution is Rs 1,482 further do not added arrears amount of April in May because in April you paid maximum contribution of 1,800 and for May arrears won't be a part of Basic for the month.
With Regards
Mr.Thumbs Up
First, get one point clear : there is no question of whether the employee will continue to stay in PF after his salary increases. If a person is in PF, he continues to stay in PF.
Second, the arrears : are they accounted in April and shown in the payroll ? You couldn't have, because you didn't know then what the increased salary would be. So you have not paid PF on it at that time.
Therefore, at present, your salary payment is of 12350 +4000. You will need to pay PF on arrears and salary to the max limit - 15000
Since There is a contradictory reply . I request any reference from Act or Case law supporting would solve the problem...Request others also to contribute.
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