We are keeping a ceiling limit for PF 15k, however an employee joined at the end of the month. In that case, his gross salary for the month is less than 15k. In this case, what will be the employer and employee contribution towards PF?

Will it be 12% on gross salary for both employer and employee contributions?

From India, Bengaluru

Will it be 12% on gross salary for both employer and employee contributions?

From India, Bengaluru

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You take the basic salary which qualifies for PF for the number of days' the employee has worked and pay PF for that amount. Suppose his gross salary is Rs 25000 but the PF qualifying salary is Rs 15000. If he has worked for, say, 10 days only, take only Rs 5000 (15000/30 X 10) as PF qualifying salary for the month and pay PF on that 5000.

From India, Kannur

From India, Kannur

Thank you Madhu for your reply. Just to make sure if I understood it correctly, can you please confirm if below is okay?

Gross Salary for 30 days: 45,000

Worked for 8 days, Therefore, Gross salary: 12000

PF ceiling limit is: 15,000

PF: (15000/30)*8 days = 4000

Please let me know if this is correct.

From India, Bengaluru

Gross Salary for 30 days: 45,000

Worked for 8 days, Therefore, Gross salary: 12000

PF ceiling limit is: 15,000

PF: (15000/30)*8 days = 4000

Please let me know if this is correct.

From India, Bengaluru

Yes, this is correct. In the ECR, you can mention 22 days (in the case of month having 30 days) or 23 days (in the case of month having 31 days) as NCPs (non Contributory Periods) against this employee who has worked only for 8 days in the month.

From India, Kannur

From India, Kannur

Madhu sir , in this case what will be the basic salary because PF should deduct on Basic +DA ,in the above case just assume that the salary break up is

as follows Gross =45,000

basic (50% gross) =22,500

HRA(50% of Basic)=11,250

other allowances=11,250

Actual PF deductions is 1800(15,000*12%) ceiling to 15,000

But in the above case the employee worked for 8 days and the earned gross is 12000 then it will automatically effects the Basc and other components right?

Then his basic is 6000(50% of earned gross) then PF will be 6000*12%=720

is this correct ???

Correct me if i am wrong

Thank you sir

From India, Hyderabad

as follows Gross =45,000

basic (50% gross) =22,500

HRA(50% of Basic)=11,250

other allowances=11,250

Actual PF deductions is 1800(15,000*12%) ceiling to 15,000

But in the above case the employee worked for 8 days and the earned gross is 12000 then it will automatically effects the Basc and other components right?

Then his basic is 6000(50% of earned gross) then PF will be 6000*12%=720

is this correct ???

Correct me if i am wrong

Thank you sir

From India, Hyderabad

If your Gross salary is 45000 and the PF qualifying salary is Rs 15000, then there is no relevance for Rs 22500, the 50% of gross as basic. What is required is the PF qualifying salary. If you contribute it on Rs 15000, then take it as base. From this 15000, find what is the salary for PF after deducting the Loss of Pay leave. If the employee has worked for 8 days, then his his earned PF salary will be Rs 4000 and the NCP days will be 22. Contribution should be on 4000.

Please understand that there is no law which says that your basic salary should be 50% of gross salary. Even if your 50% basic salary is already above Rs 15000 and you cap your PF contribution on Rs 15000, you can have a different PF qualifying salary.

From India, Kannur

Please understand that there is no law which says that your basic salary should be 50% of gross salary. Even if your 50% basic salary is already above Rs 15000 and you cap your PF contribution on Rs 15000, you can have a different PF qualifying salary.

From India, Kannur

Thank you sir .. just few more doubts

Employee salary is 22000 Gross

Basic is 11,000

employee worked for 24 days out of 30 days (6 days LOP) then what will be the PF,ESI deductions in this case sir ??

my doubt is LOPs will effect basic salary or not??

From India, Hyderabad

Employee salary is 22000 Gross

Basic is 11,000

employee worked for 24 days out of 30 days (6 days LOP) then what will be the PF,ESI deductions in this case sir ??

my doubt is LOPs will effect basic salary or not??

From India, Hyderabad

PF cap 15000/- and actual basic are two different things. When we process salary, then basic is basic which may be more than 15000/- but not the equivalent of PF ceiling 15,000/- and in case of LOP proportionate deduction will be on basic and other allowances not on ceiling of PF (15,000/-).

Therefore, in the instant case the basic will be 6000/- instead of 4000/- and PF will be deducted accordingly.

S K Bandyopadhyay ( WB, Howrah)

CEO-USD HR Solutions

+91 98310 81531

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From India, New Delhi

Therefore, in the instant case the basic will be 6000/- instead of 4000/- and PF will be deducted accordingly.

S K Bandyopadhyay ( WB, Howrah)

CEO-USD HR Solutions

+91 98310 81531

USD HR Solutions – To Strive towards excellence with effort and integrity

From India, New Delhi

I remember on the same subject Nanu had a different opinion. I am taking it again now.

It is true that Basic has nothing to do with PF salary when you restrict the PF contributions on Rs 15000. When you take Rs 15000 as PF qualifying wages, naturally, it should be the wage on which your contributions as well as NON CONTRIBUTION should rest. With 22 days NCPs in a month of 30 days, how can the PF contributing wages be Rs 6000? Since he had worked only for 8 days, his earned PF salary is Rs 4000 at the rate of Rs 500 (15000/50) per day. In the ECR it will appear as follows:

Gross salary : 6000

PF Wages : 4000

EDLI Wages: 4000

PF Contribution: 480

PS contribution: 333

EDLI : 20

NCP Days: 22

In the second example of Harry,

Since the notional salary exceeds Rs 21000, the employee would be out of ESI coverage. Suppose that he has crossed Rs 21000 this month and therefore, he should continue in ESI till September, then his ESI will be on the actual Gross earned, ie, 17600

Coming to EPF,

His Basic salary is less than Rs 15000 and as such he is contributing on his actual basic only (assuming that the employer takes only the actual basic salary where ever it is less than Rs 15000 and no other allowance is considered to make the contribution at least on Rs 15000) and that is Rs 11000. The LOP will be deducted from 11000 and the earned PF salary will be Rs 8800 (11000/30* 24) and contribution will be paid at 12% on 8800. In this case the ECR will show the gross salary as 17600, the PF salary as 8800 and NCP days as 6 days. In the month in which he has worked for all the 30/ 31 days (without any NCP days) the ECR will be like:

Gross : 22000

PF wages: 11000

NCP days: 0

From India, Kannur

It is true that Basic has nothing to do with PF salary when you restrict the PF contributions on Rs 15000. When you take Rs 15000 as PF qualifying wages, naturally, it should be the wage on which your contributions as well as NON CONTRIBUTION should rest. With 22 days NCPs in a month of 30 days, how can the PF contributing wages be Rs 6000? Since he had worked only for 8 days, his earned PF salary is Rs 4000 at the rate of Rs 500 (15000/50) per day. In the ECR it will appear as follows:

Gross salary : 6000

PF Wages : 4000

EDLI Wages: 4000

PF Contribution: 480

PS contribution: 333

EDLI : 20

NCP Days: 22

In the second example of Harry,

Since the notional salary exceeds Rs 21000, the employee would be out of ESI coverage. Suppose that he has crossed Rs 21000 this month and therefore, he should continue in ESI till September, then his ESI will be on the actual Gross earned, ie, 17600

Coming to EPF,

His Basic salary is less than Rs 15000 and as such he is contributing on his actual basic only (assuming that the employer takes only the actual basic salary where ever it is less than Rs 15000 and no other allowance is considered to make the contribution at least on Rs 15000) and that is Rs 11000. The LOP will be deducted from 11000 and the earned PF salary will be Rs 8800 (11000/30* 24) and contribution will be paid at 12% on 8800. In this case the ECR will show the gross salary as 17600, the PF salary as 8800 and NCP days as 6 days. In the month in which he has worked for all the 30/ 31 days (without any NCP days) the ECR will be like:

Gross : 22000

PF wages: 11000

NCP days: 0

From India, Kannur

Dear Mr.Madhu,

- Basic Salary - 30,000/- , Other Allowances -30,000/- & Monthly Gross -60,000/- . 5 days LOP. Actual earning Basic - 25,000/- and other allowances - 25,000/- . PF contribution restricted at 15,000/-. Does it mean that the employee will get 5 days LOP on 15000/- considering his basic ? answer is no.

In actual the employee will get 50,000/- as monthly gross and PF contribution will be on 15000/- so long the earned basic is 15000/- or more after LOP.

I have faced several cases with EPFO in different States- WB, AP, Karnataka, Maharashtra, Odisha etc. and the above is the stand of EPFO.

Warm Regards,

S K Bandyopadhyay ( WB, Howrah)

CEO- USD HR Solutions

+91 98310 81531

USD HR Solutions – To Strive towards excellence with effort and integrity

From India, New Delhi

- Basic Salary - 30,000/- , Other Allowances -30,000/- & Monthly Gross -60,000/- . 5 days LOP. Actual earning Basic - 25,000/- and other allowances - 25,000/- . PF contribution restricted at 15,000/-. Does it mean that the employee will get 5 days LOP on 15000/- considering his basic ? answer is no.

In actual the employee will get 50,000/- as monthly gross and PF contribution will be on 15000/- so long the earned basic is 15000/- or more after LOP.

I have faced several cases with EPFO in different States- WB, AP, Karnataka, Maharashtra, Odisha etc. and the above is the stand of EPFO.

Warm Regards,

S K Bandyopadhyay ( WB, Howrah)

CEO- USD HR Solutions

+91 98310 81531

USD HR Solutions – To Strive towards excellence with effort and integrity

From India, New Delhi