gross wages as per EPF ECR 2 = the amount on which basis you clculate the slab of profession tax , or the amount which is to be submitted in form 16 , ( both are same)

Hi, can any one explain how to calculate gross wages in the attached file. Regards, Nandini
From India, Mumbai

Attached Files
File Type: xls Book1.xls (18.5 KB, 340 views)

if we calculate bonus and overtime for
for 16 (TDS calculation )
Professional tax
then it also would be taken under gross wages,
remember they are not demanding the contribution on gross wages, but the gross wages summing up for 12 months would match with the wages + salary expense of the establishment,
They are also asking for "excluded employee details" ie no of persons and amount paid to them. (i.e either the persons of 58+ who are not in epf list, or the persons who have not been included in EPF or ESIC since start, due to high paid salary)
this measure is taken to trace out the employers who are showing expense under wages but evading the labor welfare benefits .

@NandiniB Please find your file marked for gross wages required for ECR generation

Attached Files
File Type: xls nandini.xls (26.0 KB, 270 views)

Hi Sharma, Thank you for the reply. PFA the file as my senior person did. Gross wage is different from your calculation to her calculation please explain me. Regards, Nandini
From India, Mumbai

Attached Files
File Type: xls nandini.xls (21.5 KB, 112 views)

There can be different interpretations for gross wages and PF qualifying/ contributing wages when it is a case with regard to an employee whose monthly salary exceeds Rs 15000. An employer is under no compulsion to pay PF on an amount exceeding Rs 15000, though many employers contribute on entire salary or at least entire Basic (plus DA) without restricting it to Rs 15000. This is the case with most of the big companies whereas medium sized companies and small companies would go for restricting it to 12% of Rs 15000.

In the former case, the PF qualifying Gross Salary is Rs 180000 per annum (15000 X 12). Therefore, the first interpretation of gross salary is that it is a salary subject to a maximum of Rs 15000 per month or Rs 180000 per annum. At the same time, if your establishment pays PF without any salary ceiling, then it can be the amount on which PF is deducted. This is the second interpretation and as per this interpretation and continuing the example given by Nandini, the gross salary is Rs 92788 per month or Rs 1113451 per annum.

Now had the employee been in receipt of a salary less than Rs 15000, certainly, his other allowances would also attract PF. That means in the case of an employee whose salary is not more than Rs 15000, the PF qualifying salary is not just Basic salary and DA but it is the gross salary less HRA. That means, PF qualifying salary should include all such allowances which are paid while an employee is on duty or on leave except HRA. There has been a misconception that among us that PF is payable only on Basic salary and dearness allowance. Certainly, it is true that PF is payable only on Basic wages and DA but what is basic salary has been defined very clearly in section 2(b) of the EPF & MP Act as the whole emoluments payable as per contract of employment except HRA. Therefore, basic wages shall include allowances also. With regard to treatment of special allowance, we have a quite number of court verdicts which say that special allowance paid to all the employees should be taken as part of salary whereas if it is paid to a particular employee considering his special skill or some kinds of hardship to which he is exposed to during the course of employment, then such an allowance shall be excluded from salary.

Hope this will clear the doubts of Nadini.


From India, Kannur
in any term the EPF amount does not differ.
under the basic concept of EPF , they want the data from employer , that as per their Profit and loss account some amount is debited under the head "wages / Salary" and if the amount is reconciled with 12 challans of the year, with gross wages, then they will not bother much.
Please note that after ECR submission they ask for "excluded employee" salary no of persons and amount also.
in gross its the way to reconciliation with the accounts and labor department returns, and to trace out if the establishment has avoided to pay the EPFO dues , which gets payable to the department,

Hi Madhu and Sharma, I understand the explanation but still i can’t able to make it out how gross wage came Rs.378917/-. Regards, Nandini
From India, Mumbai
@nandini some columns which is made "0" in your sheet, where i have marked green, may have some value, look into the payslip of the employee, and you will find the facts.

Dear sir/ madam, I have one doubt if company provide intensive to employee show we can show in ecr sheet. Thank’s & Regards Darsh Negi
From India, Rudrapur

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