Understanding PF Contributions: What Are the Salary Limits and Allowances?

Seniors, we are a micro-scale industry. We are maintaining PF accounts for all our employees who are receiving salaries between 6500 - 15000/-. This year, we implemented some increments. Here, I need some clarification about PF:

Clarification Needed on PF

1. What is the ceiling limit of salary for PF?
2. Which allowances will be considered for PF, and at what percentage?

Please share your maximum knowledge regarding this.

There is no limit for PF deduction. PF should be deducted on (Basic + DA). The employer's responsibility is up to Rs. 6,500/- only, and it is applicable for EPS. The total amount of the employee's share will be credited to the PF account. The employer's share will be divided as follows:

Salary: 6,500-00 10,000 (more than Rs. 6,500/-)
P.F. (Employer) (3.67%): 238.55 658.00 (after Rs. 6,500/-, the total amount of ER share is added to PF)
EPS (Employer) (8.33%): 542.00 542.00 (Limited to Rs. 542/- i.e., 8.33% on Rs. 6,500/-)
P.F. (Employ) (12%): 780.00 1,200.00 (employee's full share will be added to PF)

Additionally, there are 1.10% admin charges, EDLI @ 0.50%, and 0.01% EDLI Admin Charges (These are also payable by the employer only).

I hope this information is helpful to you.

Regards,
RAJU, Vizag (AP)
[Phone Number Removed For Privacy Reasons]

I could get some idea, but what is the percentage ratio for basic and DA from the gross salary to pay PF? Because someone is mentioning 65-70%, while another person is saying only 40% is applicable. I am confused by this discrepancy.

Please share your information here.

Regards,
Mohan D
TN

You have to make Basic and VDA or DA according to the minimum wages in your state. You must pay PF on minimum wages as per the Labor Act. After that, you can divide it into other allowances. For example, as per the Labor Act, Basic should be Rs. 5000, VDA or DA or CLA Rs. 1760, totaling Rs. 6,760. If you are paying more than that, in excess of the minimum wages, you can show it as HRA or any other allowance. Hope this information is helpful to you.