Whether PF Deducted From Basic Or Basic +DA

Dear Seniors,
We are going to revise the salary structure as per minimum wage policy,Please clarify me whether PF is deducted from basic or Basic+DA. Secondly Whether EL also will be calculated on the basis only or Basic +DA ?
One thing more whether Basic+DA should be equal to minimum wage,or it should be as bifercated in minimum wage is must like as per up minimum wage unskilled 2600 basic+1563.98 ?
As this is very urgent,Please reply me soon.
Thanks in advance
Ritu

Dear Ritu

You can revise the salary structure as per minimum wage policy and Provident Fund is always deducted on basic wages only not on basic + DA. For your reference I am reproducting Section 2 (b) of the Employees Provident Fund & Miscellaneous Provisions Act, 1952:-

Section 2 (b) “Basic wages” means all emoluments which are earned by an employee while on duty or 4[on leave or on holidays with wages in either case] in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include-

(i) The cash value of any food concession;

(ii) Any dearness allowance (that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living), house-rent allowance, overtime allowance, bonus, commission or other similar allowance payable to the employee in respect of his employment or of work done in such employment;

(iii) Any presents made by the employer;

It is mandatory for the employer to deduct and contribute the provident fund of every employee whose basic is Rs. 6,500/- or less. Further Earned Leave will be calculated on the Basic +DA whether it is less then the minimum wages or more than the minimum wages, but the employer has to make the payment of leave encashment on basic + DA.

Hope that the above will satisfy your query, if any other clarification you are most welcome.

Dear Ritu & Mukesh,
As far as I know ....the
Employees Provident Fund is not calculated on Basic salary alone. The Dearness allowance shall also be taken. The rate of EPF deducted from the employee is 12% which will go the EPF (Provident Fund) Employer will contribute 12% which will be apportioned as 8.33% in Employees Pension Fund and the balance 3.67% in EPF(along with employees' share of 12%.
In addition to this, of course, the employer has to pay 1.1% towards Administrative charges, 0.5% towards Employees Deposite Linked Insurance (EDLI) and 0.01% towards Administrative charges of EDLI. Administrative charges and EDLI are caculated on the Basic + DA salary and are not recoverable from the salary of employees.
Regards,

Dear Krishan
Kindly go through the Section 2 (b) of the Employees Provident Fund & Miscellaneous Provisions Act, 1952:-
Section 2 (b) “Basic wages” means all emoluments which are earned by an employee while on duty or 4[on leave or on holidays with wages in either case] in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include-
(i) The cash value of any food concession;
(ii) Any dearness allowance (that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living), house-rent allowance, overtime allowance, bonus, commission or other similar allowance payable to the employee in respect of his employment or of work done in such employment;
(iii) Any presents made by the employer;
The above contentions is supported by a judgment of Hon'ble Punjab & Haryana High Court, wherein it has categorically held that the provident fund shall be contributed only on basic wages only.

Agreed with your clarification Mr. Mukesh_Azad. You're cent percent correct. PF will be calculated on Basic only. All the admin charges also will be calculated from earned basic only. Proven example judgment of Hon'ble Punjab & Haryana High Court. I do have the judgement copy.

If my salary is 11000/- per month. How much epf will be deduct from employee and employer both sides.

Dear Ritu, It is always better to take minimum wage as basic salary. So that you won't face any problems from your local labour departments and PF will be calculated on Basic + DA. When there is no dearness allowance then you can calculate PF on basic wage Useful Websites For HR Professionals

If your salary is 11000 per month your 12-% epf will be deducted from you and 13.61 from employer's side .

Dear Mr. Mukesh,
Kindly refer Ch. V, Sec.29 which says following:-
(1) The contribution payable by the employer under
the Scheme shall be at the rate of 12[twelve per cent] of the
[basic wages, dearness allowance (including the cash value of any food concession) and retaining allowance (if any)] payable to each employee to whom the Scheme applies.
Hence, it is clear, PF contribution is to be made on basic +DA, not basic only.
Warm regards,
Jaspal Bhanker

PF will be calculated on Basic +Da, but in most of the private organizations there is no DA, so they are calculating PF on only basic salary.
PF employee contribution: 12%
PF employer contribution :
PF 3.67%
Pension: 8.33%
PF admin charges: 0.65%
EDLI Charges: 0.5%
EDLI Admin Charges: Nill
My EPF Guide -Employee Provident Fund Guide