New to the Office: How Do I Figure Out Gross Salary, Professional Tax, and Provident Fund?

I have a problem; I am a new person in my office and I don't know about the provident fund. How do I calculate gross salary, net salary, and professional tax? In my office, there is a colleague who knows everything but hasn't shared it with me, so I am facing many problems. Please help me understand about PF.

Thank you, sir.

Please go through this attachment if it can be of any help to you. Provident Fund (PF) deduction is usually 12% of the basic salary.

Thank you and regards.

For example: If your gross salary is $30,000 per month, then the basic salary will be 40% of the gross ($30,000) - $12,000. HRA (40% of basic in non-metro areas, 50% in metro cities) - $4,800. Conveyance - $800. Medical - $1,250. LTA - $1,000. Special Allowance - $10,150 (remaining amount). Total - $30,000.

Deductions: PTAX - $200. PF - 12% on basic ($12,000) - $1,440. Total deductions = Net salary. $30,000 - $1,640 = $28,360 (Gross).

Regards, Kumar

Professional Deduction and Provident Fund (P.F.) Eligibility

Professional deduction is Rs. 200. Regarding P.F. deduction, if his basic pay is more than Rs. 6500/- and he is not a member of P.F., he is not eligible. If he is already a member and we have continued him in P.F., the deduction of P.F. should be restricted to Rs. 6500/- at a 12% rate.

Regards,
D. Gurumurthy
HR/IR Consultant

Professional deduction is Rs. 200. Regarding P.F. deduction, if his basic pay is more than Rs. 6500 and he is not a member of P.F., he is not eligible. If he is already a member, then we will continue him in P.F., and the deduction of P.F. should be restricted to Rs. 6500 at a 12% rate on basic pay, or it may depend upon the company; some companies prefer to have a maximum deduction of Rs. 780 per month. This is for your information.

Regards,

I have one clarification. Suppose I leave the job within one year of joining to go for higher studies. Can I close my EPF account and receive the amount along with interest? What is the procedure for this?

Regards

I hope you have already cleared your query about the gross salary from the discussions among the members above. I would like to provide you with additional information regarding P.F:

There are Two (2) Cases to be Considered for PF Formulation:

(1) Limited P.F: In this case, the Provident Fund's limit is fixed by the government at Rs. 6,500 (mandatory). Further considerations include the following two (2) scenarios:
(A) If the basic salary exceeds Rs. 6,500, then the PF contribution is calculated as 6,500 * 12%.
(B) If the basic salary is less than Rs. 6,500, the PF contribution amount is calculated as the basic salary * 12%.

(2) Unlimited P.F: In this scenario, the company sets the statutory limit for the PF, which is calculated as the total basic salary * 12%.

I hope the above explanation helps clear your query regarding the Provident Fund.

Regards,
SATYAJEET.

Provident Fund Withdrawal Guidelines

You can claim your Provident Fund (PF) if you have drawn a complete one month's salary (at least 30 days' pay). Yes, you can claim your PF amount with interest, and it will accrue interest for up to 3 years. After 3 years, you will no longer receive any interest on the amount, but you can withdraw your PF amount from your PF account.

Provident Fund Contribution Requirement

For your kind information, I just want to inform you that according to PF law, every employee must contribute to their PF when their basic salary is more than Rs-1 Crore.

Thanks & Regards,

Lokesh Yadav
[Phone Number Removed For Privacy Reasons]

Gross Salary Calculation

Gross Salary = (Basic + HRA + T.A + M.A + LTA + S.A)

Some Rules:

- Basic Salary (50% in Metro OR 40% in Non-Metro)
- HRA (50% in Metro OR 40% in Non-Metro)
- T.A: Fixed 800 per month
- M.A: 1250 per month

The Calculation:

If, for example, the Gross Salary per month is 50,000:

- Basic: 20,000 (40% of Gross Salary) (e.g., Hyderabad)
- HRA: 8000 (40% of Basic) (e.g., Hyderabad)
- T.A: 800
- M.A: 1250
- Special Allowance: 19950 (Gross Salary - (Basic + HRA + TA + MA))

Deductions:

- Profession tax: In Hyderabad, the PT is 200 if Gross Salary is above 20,000.
- P.F by employee: Provident Fund has many conditions. As his basic salary is more than 6500, he is not eligible for P.F. But if he continues to deduct PF since his salary was 6500, he can deduct the P.F. either on the shrink basic, meaning 6500, or on 20,000. Here, we take P.F as 12% on 6500 = 780.

780 + 200 = 980 (deductions)

Gross Salary - Deductions = Net Salary

50,000 - 980 = 49,020

Here, it's important to note that PF is a concept that depends on company norms. Sometimes it is calculated on the shrink basic (12% of 6500 if basic < 6500) or sometimes on the original basic, meaning 12% on 12,000 if the basic is 12,000, no need to shrink it.

Regards,
Aditi Shrivastav

Gross salary is the total of your earnings. Net salary is what you receive after all deductions (PF, PT, EMI, etc.).

Professional Tax (PT)

PT stands for Professional Tax and is deducted monthly based on your gross earnings. It varies by state.

Provident Fund (PF)

PF stands for Provident Fund. It is deducted from your gross salary according to certain rules and company policy. You need to read about these to understand them well.

Regards,
Prachi Shinde

Based on my experience, there is no specific rule stating that you must calculate at 40% of the basic or gross pay. This calculation typically depends on the company's policy. In metropolitan areas, it is usually set at 40%, while elsewhere it might be at 50%. Setting the basic pay at either 40% or 50% of the gross pay can help reduce the employer's liabilities concerning PF, bonus, gratuity, leave encashment, etc.

Thank you,

Dilip

[Phone Number Removed For Privacy Reasons]

I just wanted to inform you that the base slab in PF is Rs. 6500. For example, if my basic salary is Rs. 50000, then I contribute 12% of that amount towards PF (i.e., Rs. 50000). The employer's contribution is based on Rs. 6500. However, if the employer does not want to deduct your PF, then you should fill out Form-11.

Regards,
Lokesh Yadav
[Phone Number Removed For Privacy Reasons]

Thank you for the information regarding professional tax. Another thing I need to know is how to make online payments through EPF.

Thanks and Regards,
Lachiya

If your basic salary exceeds Rs. 6500/- and you are not a member of PF before joining the organization, the employer is not bound to deduct PF. You are an exempted employee from PF liability.

Regards,
Dilip