Want To Know About PF - CiteHR
HR_ROY
Management Coach I Hr Strategist I Career
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Hi am working as hr manager in it company we are having 30 employee in our company the salary of the employee is less than 15,000. We are calculating salary very simply can you please tell me when we have to make deduction and also about the deduction in proper manner.
Dear first of all check out if everyone's salary is above minimum wages or not. If not then make it . For minimum wages check out your state's wage slab.
Now as the salary is below 15k and 30 employees are there hence PF and ESI are both applicable.
Lets consider:Gross:15k.
Basic= 50% of gross.
HRA=40% of basic for non metro
50% of basic for metro
TA= 800/1600
Medical=1250
Special= Rest amount of gross.
Deduction from salary.
PF=12% of Basic.
ESI=1.75% of gross.
Takehome:Gross-Deduction.
Pls. Note: The basic should be at least equal to minimum wage in case any employee's salary is low for the purpose of PF deduction as PF should be deducted on minimum wages at least not on any amount below that.
You can adjust special allowance to reach the gross amount of 15k.
This is a very basic structure which you may follow.

There is no compulsion to split your salary like basic, DA, HRA etc. you are free to pay salary as 'consolidated' as if all of you are < Rs.15,000/p.m. no TDS will be attracted. However check whether Prof.Tax will be applicable as presumably Chandihar means there is both Haryana and Punjab as well as Union Territory is involved. EPF (if consolidated more contribution, if split into medical etc. contribution lowers & ESI has to be deducted on the similar way as per the act.
in our company the total strength of the employee is 20. And minimum salary is 6,000 i just want to know when the company should levy PF on their salary.please help me to make their payroll as i am fresher and don't know about payroll please help me.
Dear,
You have mentioned that all employees are drawing salary less than 15000.
Since all employees salary is less than 15000/-. You have two following ways to bifurcate the salary:
Option 1 : For salary from 10,000 to 14999 Keep their basic as per Minimum wages of your State and n HRA @40 % of basic and balance in other allowance. Accordingly you can deduct PF on Basic and DA.
Example: Basic : 7500
HRA @ 40% : 3000
Rest in other allownce
Deduct EPF @12% on basic
Option II : For Salary from 7000 to 9999, you keep basic and DA as per minimum wage and rest in allowance.
Example: Basic as per minimum wages
Rest in other allowances
Deduct EPF @12 % on MW
In both options TDS is not applicable
If any employee drawing more than 15000
Keep Basic 52% of CTC
HRA 40% of basic
Children education: 200
Conveyance 1600
Medical 1250
rest in other allownce
Keep in mind that while fixing the
Regards
Eswar

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