Confused About EDLI and Admin Charges with New Payroll Software – Need Guidance!

I am so confused. We always calculate EDLI & Admin Charges on PF Salary. However, one month ago, we installed new payroll software, but the software calculates EDLI & Admin charges based on 6500/- or Pension Limit. This creates a difference compared to manually calculating the monthly challan form.

Understanding PF Return Calculation

As per my knowledge, PF return should be 25.61% of PF Salary. Could you please tell me the correct procedure?

Even though I have been working here for the last 3 years, no auditor has raised any objections to this calculation.

Thanks,

Punit Dixit

For PF calculation, you may take the actual salary. However, for Pension & EDLI, it is to be restricted at the ceiling salary, i.e., Rs. 6500. Since EDLI calculation is based on central pooling, calculate the consolidated salary (subject to an individual ceiling of Rs. 6500) of applicable employees. Calculate the EDLI & admin charges on this total salary and round to the nearest rupee.

Regards,
Abbas.P.S

Confusion Regarding PF Challan Calculation

I also have the same confusion regarding the PF challan (EDLI & Admin charges). In my previous company, we used to calculate the PF challan (EDLI & Admin) based on 25.61% of the PF salary. However, in my new company, it is calculated based on Rs. 6500. Could you please guide me on the correct way to calculate this? I have read somewhere in Labour Law that the PF challan (EDLI & ADMIN) should be calculated based on Rs. 6500.

Thanks & Regards,
Parmod

Dear Punit Dixit and Parmod,

The statutory contributions of PF, EPS, and EDLI are up to a ceiling salary of Rs. 6500. However, some organizations contribute to PF based on the actual salary beyond Rs. 6500. This is not statutory but optional. I shall provide an example for a salary of Rs. 10,000.

Contribution on Statutory Limit:

- Employee contribution to PF (12% of 6500) - 780
- Employer contribution to EPS (8.33% of 6500) - 541
- Employer contribution to PF (780-541) - 239
- Administration Charges on PF (1.1% of 6500) - 71.50
- Employer contribution to EDLI (0.5% of 6500) - 32.50
- Administration Charges on PF (0.01% of 6500) - 0.65
- Total - 1604.65

Contribution on Full Salary:

- Employee contribution to PF (12% of 10000) - 1200
- Employer contribution to EPS (8.33% of 6500) - 541
- Employer contribution to PF (1200-541) - 659
- Administration Charges on PF (1.1% of 10000) - 110
- Employer contribution to EDLI (0.5% of 6500) - 32.50
- Administration Charges on PF (0.01% of 6500) - 0.65
- Total - 2543.15

Regards,
Abbas.P.S