Understanding PF Deductions: Is There a Rate Chart for Basic Salary Calculations?

One thing to clarify is the minimum rate of the basic salary for PF deduction. Is there a rate chart available for the deduction of PF based on the basic salary or wages?

The minimum basic should be ₹3000. Otherwise, you will be questioned at the time of inspection because I faced the same problem.

If my organization pays wages at minimum wage of 3000/month, with other allowances of 2000/month and incentives of Rs 4000/month, please guide me on how to calculate PF.

There is no mention of "minimum wages" in the PF Act. The PF Act mentions only "Basic salary." The argument is not correct.

Dear Sunil,

You have to deduct PF on the Basic+DA part of the salary. There is no chart for this as the Basic+DA (if any) in your company would be guided by the States in which you have employed people. You will have to follow the Minimum Wages of each State where your people are employed. In the States' Minimum Wages, there would be this component of Basic + DA on which you have to pay PF (Employer + Employee share).

Note: In some States, the DA component is merged into Basic, hence you would only see the Basic component. Please don't get confused.

Regards

Dear Sunil,

There is also a possibility of another view. You may pay total gross wages as per the Minimum Wages Act of 1948, and ideally, keep the basic wages at 60% of Gross Salary. The Provident Fund deduction must be at 12% of Basic + DA. The Provident Fund authorities may take a stand that you have deliberately reduced the basic wages compared to what is prescribed under the Minimum Wages Act. This can be well answered with a recent judgment of the Honorable Punjab & Haryana High Court in the matter of Asst. Provident Fund Commissioner vs. G4S Security Services India Ltd.