Is PF Calculated on Special Allowance? Seeking Clarity and Official Sources

Can anyone tell me if PF is calculated on special allowance or not? If yes, then please show me where this is written or from where I can get this information?

Hi,

If basic and DA exceed 6500, what do we do? In our company, only Rs. 780 is deducted from the salary of Rs. 7500. Is this correct?

Hi,

At the time of joining, if the salary (Basic + DA) is more than Rs. 6500/-, PF contributions may not be deducted and the employee will be treated as an exempted employee.

In case the employee is already a member of PF in your firm, the salary may be restricted to Rs. 6500/- to recover the PF contributions.

Regards,
Venkat

Understanding Provident Fund (P.F.) Deductions

1) P.F. is deducted on Basic + D.A + Cash value of Food Allowance at 12%. It is a statutory deduction. D.A. is provided only in government departments. Private companies generally do not give Daily Allowance to their employees.

2) The company pays P.F. on either actual basic or capped basic. Capped basic is decided depending on company rules; it is not restricted. It's applicable to those employees whose basic exceeds Rs. 6500 only.

3) Employers and Employee Contributions are equal in P.F., which is 12%. This means a 12% contribution from the employee and a 12% contribution from the employer. The company's contribution is split into two parts: 8.33% on the Family Pension Fund and 3.67% on the Employee Provident Fund.

4) The employer also needs to pay additional charges every month over and above the PF company contribution. The breakdown is as follows:
- 1.1% P.F. Administration Charges,
- 0.5% on Employee Deposit Linked Insurance (E.D.L.I), and
- 0.01% E.D.L.I Administration Charges.