Understanding PF Calculations: How to Handle Basic Pay, HRA, and Contribution Limits?

Hi, In my company, 'basic pay' is a minimum of 4000 Rs and a maximum of up to 6500 Rs. PF is calculated at 12% of the basic, and an equal contribution is made by the employer and employee. Please resolve my 4 queries regarding PF calculation:

1. Please provide some insight into the percentage or amount of the 'basic element' of salary. What is the minimum to maximum range of the 'Basic' element of salary for PF calculation?

2. If someone's basic pay goes above 6500 Rs, should we calculate PF till 6500 Rs or for the total amount of basic?

3. What is the proportion of Basic and HRA elements in the total salary?

4. Do the employee and employer have to deposit the same amount of PF, or is the percentage of submission different?

Regards, Gunjan

I think the same question was answered many times. It is not mandatory that the PF should be contributed only on a basic salary subject to a maximum of Rs 6500, but if the employee wishes to contribute on a higher amount, say, Rs 15000, he can do so. The percentage of 12% is the statutory minimum, and if the employee wants to contribute a higher percentage, he can do so. However, the employer can restrict their contribution to Rs 6500 and to 12%. If the terms of employment so require, the employer can also contribute a higher percentage and on a higher amount. As such, the employer's contribution and the employee's contribution need not necessarily be the same.

Basic Salary and HRA Proposition

Regarding basic salary and HRA proposition, there is no hard rule, but it is decided according to the company's internal policies.

Regards,
Madhu.T.K

Please find attached PF Calculation (samples).

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Please find attached PF Calculation samples.

My basic salary is 15,000, and DA is 7,080. Could you please tell me how to calculate PF?

Calculation of PF Deduction

Calculation: Basic + DA x 12%
15000 + 7080 = 22080 x 12% = 2649.6 (Amount deducted by the employee)

Regards