Hi Need Info On PF Deduction

Hi. Want to understand PF of employees should be deducted from Basic salary componant or it should be over and above the Basic amount of an employees salary.
For Eg - Basic+HRA+Conveyance+sp allowance+ employees pf+ employers pf or
Basic+HRA+Conveyance+sp allowance+employers pf.

Dear IQ India,

Provident Fund is generally deducted both from employee as well as the employer, 12 % of (Basic+DA). Establishments employing 20 or more persons are required to deduct PF from the salary of employees.The salary breakup for monthly salary (10000) is not fixed as it varies from company to company and in general it includes Basic, Conveyance(800), HRA (40% or 50% of Basic), Medical allowance, Special allowance etc..

Therefore a small example:

Consider the basic of an employee if less than 6000. (say 6000/-)

Employee contribution will be 12% = 720

Employer contribution will be 12% (which is again classified),

EPF (3.67%)= 220

EPS (8.33%) = 499

EPF Admin charges (1.10%) = 66

EDLI (0.50%) = 30

EDLI Admn charges (0.01%) = 1

Consider the basic of an employee if less than 10,000/-

Employee contribution will be 12% = 659

Employer contribution will be 12% (which is again classified),

EPF (3.67%)= 541

EPS (8.33%) = 541 (It is calculated on 6500/- and the remaining amt is added to the EPF)

EPF Admin charges (1.10%) = 110

EDLI (0.50%) = 33

EDLI Admn charges (0.01%) = 1

Hope this clarifies your query.

Hi,
the pf is deducted on basic salary what ever it is 40% or 50% in gross and in you can reduce the pay of pf if it is in high amount by making the basic salary as 6500 and then the pf will be 780 ,by this you can save employee and employers funds