Will Our Salary Calculation Dates Cause Issues with PF or Professional Tax Compliance?

Hello Seniors,

I'm Brinda from Ahmedabad, working as an Assistant Manager - HR. I have a query, please help me solve it.

We are currently calculating the salary based on attendance from the 26th to the 25th of the following month. This means we consider attendance from 26th Sept to 25th Oct for October month's salary, and from 26th October to 25th November for November month's salary. The issue lies with the number of days in each month; according to our calculation, October has 30 days, and November has 31 days. Will this discrepancy create any statutory problems regarding PF or Professional Tax? Please provide guidance, or kindly email me at [IMG]https://www.citehr.com/misc.php?do=email_dev&email=aHJkMUBtYnByb2ZsZX guY29t[/IMG].

Thanks,
Brinda Shah

Hi Brinda,

Generally, when the cutoff date is considered, the salary is paid for the full month. In your case, if the cutoff date is the 25th, then the salary should be paid until the 30th (for November salary), assuming the employee is present from the 26th to the 30th of the month. Any leave or absent adjustments can be made while processing the next month's salary. Therefore, there should not be any problem concerning statutory compliance.

I hope the above explanation will resolve your confusion.

Regards,
Harshad

Dear Harshad,

Thank you for your reply. Could you please inform me about the potential problems that may arise, considering that we are already paying salaries in the middle of the month?

Thanks,
Brinda

Dear Brinda,

Could you please inform me by which date you will be releasing the salary? When you mention "mid of the month," does that mean the salary will be paid on the 15th or at the end of the month?

Regards,
Harshad

Dear Harshad,

We calculate the salary mid-month but pay by the 5th of the month. We have set the cut-off date as the 25th of every month, meaning we process the salary till the 5th and deposit the same. However, the only issue is that when we calculate the actual salary from the 26th of October to the 25th of November, it covers 31 days, while November has only 30 days. This discrepancy may cause problems in statutory reports. We are eligible for ESI, with deductions only for PF and Professional Tax.

Brinda

Dear Brinda,

Ideally, even if you are taking a cutoff as the 26th to 25th, you should pay the salary for the full month until the 30th or 31st, as the case may be. The adjustment for the remaining days after the 26th can be done in the next month so that you do not have any statutory problems. You may pay the salary by the 5th but pay for the full month.

For example, for the November salary, you will take attendance from the 26th of October to the 25th of November but pay until the 30th of November. Whatever adjustment is needed after the 25th till the 30th can be done in the next month. This way, you will not face the problem of 30/31 days every month.

Regards,
Harshad

Dear all,

Calculating salary for the month of March 2009, you have to take 25 days as per the attendance sheet and assume the remaining 6 days as present. For example, Present - 24, Weekly off - 5, Holiday - 2 = 31 days.

When calculating the salary for the month of April 2009, you should consider 25 days as per the attendance sheet and assume the remaining 5 days as present. For example, Present - 26, Weekly off - 4 = 30 days.

If the employee has taken leave on the 30th and 31st of March 2009, adjustments need to be made as follows: present - 24 (26-2), weekly off - 4, casual leave - 2 = 30 days (if leaves are available otherwise Loss of Pay).

Regarding Overtime/Night Shift Allowance/Attendance Bonus payments, they should be calculated from 26.03.2009 to 25.04.2009. This approach eliminates any calendar month day issues.

Please feel free to contact for any further clarifications.

A. Ravinder Reddy, [Login to view] Personnel Manager 94404 96160