Understanding PF Calculations: Are Monthly Incentives Included in the Amount?

Dear Seniors,

We have one query:

1. Is the PF amount calculated on incentives earned during the month?

Please guide and advise.

Hi Milind,

PF is always calculated on Basic, which does not have a direct relation to the incentive. So, as per my knowledge, PF cannot be calculated on incentives.

Regards,
Viyannar

Hi Milind,

PF is calculated based on Basic salary only, and incentives do not have any impact on the Basic. If there is any bifurcation in the salary, then it can be calculated accordingly.

Regards,
Kamesh Kumar KHATANA

PF Calculation on Monthly Incentives

Recently, we had an enforcement officer visit our company. He reiterated that PF needs to be calculated on incentives if they are paid monthly. He also showed a citation to that effect. I am in search of that citation. He mentioned it is available in the new edition of the PF Act.

Regards

Dear All,

PF will be calculated on the basis of the fixed salary, not including any variable component and incentives. The incentives will be categorized as other earnings.

Regards,
Bhuvana

Dear R S Biswal,

Can you please post the new edition of the PF Act that supports the incentives earned on a monthly basis to be included in calculating PF?

Thanks, Subiah Chennai

Hi,

Under NO circumstances can incentives be added when calculating PF contributions. Let the officer show the rule in the PF MP Act 1952. It will be knowledgeable to us as well.

PF is calculated only on BASIC + DA.

Regards,
H Singh

As per our PF Office in Chennai, whatever the employee is paid, such as basic, DA, conveyance allowance, attendance bonus, special allowance, incentive, etc., will be taken for PF calculation except HRA, OT, bonus, commission, etc. Is this correct? Appreciate a response.

Regards,
Usuf Ali, Chennai

If you have divided your salary structure between Basic, HRA, conveyance, etc., then you have to pay the PF only on the Basic Salary; otherwise, it will be calculated on the Gross Salary. However, in both cases, you may deduct a maximum PF of Rs. 780 per employee if their salary exceeds Rs. 6,500 per month.

Regards,
Sanjeev Kwatra

My salary is $10,000, and my incentive is $3,000 monthly. What is my ESI amount?

Please include incentives if they are a monthly feature. Any allowance paid on a monthly basis will be added to the basic for calculating ESIC Gross.

What can be accounted for ESIC Gross Salary:

Basic + HRA + Allowances + Monthly Bonus + Monthly Reimbursements

Any amount paid on a yearly basis will not be included in ESIC Gross Salary.

Warm Regards,
Neha Kapoor