PF Calcutation

If an employee's basic salary is Rs. 6500 then the PF is mandetory. But if an employees's basic is more than Rs 6500 then its optional. It depends on company's policy. E.g If an employee's basic is Rs.10000 then what will be the PF amount? In this case what will be the basic amount (6500 or 10000) on which Pf will be calculated?

Normally PF is calculated @12% on Basic Salary. As per PF Act the restriction imposed is 6500/- which is not an absolute restriction. If an employee drawing higher wages can also opt for deduction of PF @12% on the basic wages above 6500/-. There is a provision wherein an employee can also enhance his contribution to 20%, however, the employer contribution will be restricted to 12% only.

Dear Mr. ,
It depends on the company's policy to fix the basic wage. the basic wage should be equal or greater than the minimum wage as mentioned under the schedule of minimum wages act.so if they fix the basic as Rs.10,000 then they should pay the EPF(12%) for Rs.10,000/-

Dear Mr.jaykumtekar,
First of all i would like to make you clear that Rs. 6500/- is the cealing for EPS &EDLI not for EPF. Deduction of EPF is done on the basis of BASIC+DA/VDA+ Food conc. (if any).Secondly if any of your employees having basic Rs. 10,000/- and the employee-employer were willing for deduction then the deduction should be on Rs.10,000/- but the EPS contribution should be on Rs.6500/- and if employer does'nt want to contribute on Rs. 10,000/- he can contribute on Rs. 6500/- but it will be depend on employee-employer mutual consent.
thanks & regards,
From,
Sumit Kumar Saxena,
9899669071

Sub: PF and ESIC Calculation
Thank you Mr. Sumit Kumar Saxena for clarifying the actual basis for EPF deduction. However, various sites give various percentages. I would appreciate it if you would please let me know the Employer's percentage share on the Basic + DA and the Employee's percentage share on the same, i.e. Basic + DA.
Similarly, please would you enlighten me on the actual basis for ESIC deduction and what exactly the Employer's percentage share would be? Similarly, what exactly would the Employee's percentage share be?
I understand that the Bonus of 8.33% is calculated on the basis of Basic + DA. Please correct me if I am wrong.
Furthermore, on what basis is Gratuity calculated?
Please enlighten. I would be very grateful.
Respectfully,
LRGA

Dear LRGA,
Greetings for the day,
Thanks for expressing intrest , the employer percentage of share will be 12% of the EPF salary, 1.1% of EPF salary, 0.5% of EDLI salary(Cealing should be Rs. 6500/- not on above), 0.01% of EDLI/Pen.Sal (Cealing should be the same) .i.e 13.61% will be the employer share.
Employee Share should be 12% of the basic +da.
Total Challan value should be 25.61%.
The basic of ESIC calculation should be Employee Share-1.75% of the Gross salary, Employer share -4.75% of the total salary. The wages & salary cealing should be Rs. 15000/- pm, contribution should also be paid on overtime/incentives except on those allowances that are reimbursed.

you are right bonus is also calculated on basic +da and 8.33% should be the minimum and 20% should be the maximum and will be paid to them who were earning Rs. 10,000/- and calculated on Rs. 3500/- and the period taken for calculation should be the financial year.

Calculation of gratutity is also done on basic+da and for the payment 5 years of continues service is required and the formula should be.
Last drawn salary/26*year of service*15.
thanks & regards,
from,
Sumit Kumar saxena,
9899669071

Dear Everyone,
As per the PF rules and Regulations deduction should be effected as follows :
1. PF is 12% from Employee side & 3.67% from Employer side paid into Account No.1.
2. Pension is 8.33% from Employer side paid into Account No.10. Hence the total PF contribution deducted is 15.67%.
3. EDLI deduction is 0.50% to be paid in Account No.21.
4. EPF Admn. Charges is 01.1% to be paid in Account No.2.
5. EDLIS Admn. Charges is 0.01% to be paid in Account No.22.
The total contribution for EDLI, EPF admn.charges and EDLIS Admn.charges is 1.61%.
Hope every thing is clear.
Jay Kumtekar.