Provident Fund Calculation for Mid-Month Joiners: Is Proration Legal or Not?

Provident Fund Calculation for Mid-Month Joining

In the case of mid-month joining, leaving, absences, or transfer scenarios, how should the Provident Fund (PF) be calculated?

For example, if an employee's gross salary is ₹20,000 per month and they join on the 15th of April 2013, they are eligible for ₹10,000 for that month. So, PF for 30 days is ₹780. However, since the employee joined on the 15th of April, their PF is calculated as ₹780/30 = ₹26 per day, which amounts to ₹26 * 15 = ₹390.

Is the above calculation correct? My client insists that even if the employee's basic salary is more than ₹6,500 after mid-joining, a flat deduction of ₹780 must be made and proration should not be considered.

Can this legally happen?

Regards,
Chandu

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EPF contribution is calculated based on the actual amount paid (basic + DA or a ceiling of 6500/-). There is no fixed amount to be contributed to the EPF. Your calculation is absolutely correct.

Thanks,
Kamal

Hi Kamal, so you mean to say if an employee joins on 16.04.2013 with a basic salary of 15,000 after prorating (actual basic is 30,000), then his PF should be 780 or 780/30 = 26 Rs per day. Therefore, for 15 days, 26 * 15 = 390 should be deducted.

PF Contribution Calculation

PF contribution should be 12% of the basic + DA (actually paid). If there is a ceiling of ₹6,500 for PF contribution, then it should be ₹780 because the employee is getting more than ₹6,500.