Understanding EPS Wage Calculation: Do We Adjust the Rs 6500 Ceiling for LWP Days?

While calculating EPS wages, do we have to reduce the Rs 6500 ceiling proportionate to LWP days even if the EPF earnings are already below Rs 6500? For example, the standard Basic+DA of an employee is Rs 10,000. If LWP for June is 15 days and the earned Basic+DA is Rs 5000, which is also considered for EPF, should we maintain Rs 5000 for EPS or prorate Rs 6500 / 30 x 15 = 3250?

As far as I understand, if the EPS wages are under 6500, then we have to take the same amount. However, I am not aware of reducing the Rs 6500 ceiling proportionate to LWP days. Experts, please shed light on this.

Regards

You can take either way. For the pension fund, the only requirement is that the amount should not be more than Rs 541, i.e., 8.33% of 6500. If the gross salary is Rs 5000 and if you deduct Rs 600, then you can bifurcate your share of contribution as 417 towards the Pension Fund and the balance Rs 183 towards the Provident Fund. Alternatively, you can remit Rs 271 (8.33% of 3250) to the Pension and the balance, 329 in the Provident Fund. In both cases, the cost to the company would be the same.

If you have the practice of restricting both PF and the Pension fund to 6500 and reducing the PF qualifying salary proportionately by every loss of pay day, then you will have to hold the salary as 6500 and reduce it by the number of unpaid days. In such a case, the PF will be deducted on Rs 3250 (in your example).

Both ways are being practiced. The only thing is that if you follow one system, then it should be followed.

Regards,
Madhu.T.K