Confused About PF Contribution Calculation? Need Help with Monthly Salary Deductions!

I have one query regarding PF contribution to be deducted in the following cases:

PF Contribution Calculation

Gross (Basic + DA) Salary is Rs. 6750. Working days in a month are 24 days. Now, should the PF contribution be on Rs. 5400 (6750/30*24) or on Rs. 5200 (6500/30*24)?

Please advise.

Thanks & Regards,
Ajay

Is the above employee a new joiner or an existing employee?

If a New Joiner:
6750/30 * 24

If an Existing Employee:
6500 * 30 / 24

If you need more clarifications, you may contact me:
Lakshminaryana
[Phone Number Removed For Privacy Reasons]
Regards

Are you not paying wages for the remaining 6 days in a month?

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai

PF is to be calculated and paid on the salary which you receive at the end of the month. For more clarification, please go through the discussions in Citehr and search for it. It has been discussed multiple times.

Regards

If your company is deducting PF within the ceiling of 6500, then it would be deducted based on the amount of (6500/30*24), considering six days as LWP. However, if any of the absence days are paid (e.g., weekly off or paid leave), then the payment for those should also be added. PF will be deducted on the sum of that amount.

Regards

Dear Vinod ji,

Thanks for your reply. The 24 days of working include weekly off and paid leaves, and we are paying the PF contribution within the ceiling limit. Therefore, the calculation of the amount will be 6500/30*24. However, our consultant says that the calculation by 6750/30*24 falls under the ceiling amount, so the amount will be calculated using the latter method.

Please advise your valuable suggestion.

Regards,
Ajay

Dear Sir,

We are not paying for 6 days as the worker was on leave for more than 9 days, and the applicable CL and EL are already included in the total of 24 days.

Please advise your valuable suggestions.

Regards, Ajay

The ceiling amount of Rs. 6500/- is applicable for those who are earning more than Rs. 6500/- (for the purpose of PF computation). In this case, his actual earnings will be less than Rs. 6500/- based on the rate of pay for him for the month. Hence, PF is to be computed on the actual payment received based on computation - earning on the rate applicable, i.e., on Rs. 6750/- for the period of his attendance - 24 days.

In the above case, PF should be deducted on actual earnings as the earnings are less than the PF limit. i.e., PF = 12% of (6750/30*24) = Rs. 648.

Thanks & Regards,
Atul Saklani

I too agree with the view of our respected member Mehrunisa Basima. PF is calculated on the salary (Basic + DA) which is paid at the end of the month to the employees who are already covered under the EPF Scheme.

Regards,
T.M. Rao
HR Consultant

I am not able to understand why the wages drawn by an employee in a month should be divided by the formula indicated by some members to decide the quantum of contribution and what the legal basis for it is. I concur with Meherunisa Basima and T.M. Rao on this issue.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai