Confused About PF Contributions? Clarifying What Counts in the 15K Salary Threshold

With the recent amendment, employees with a salary of less than 15K are mandated to contribute to PF if the number of employees in the organization is 20 or more.

Calculating the 15K Threshold

My doubt is in calculating 15,000. Should we include HRA and other allowances like conveyance, medical reimbursement, and uniform allowance, or exclude them?

Exclusion of Allowances for PF Contribution

Can we exclude allowances like conveyance, medical reimbursement, uniform allowance, along with HRA for calculating the 12% contribution to the PF fund?

Can anyone clarify, please?

PF Contribution Clarification

PF contribution is payable on Basic, DA, and retaining allowance, if any. HRA and other allowances like conveyance, medical reimbursement, and uniform are not included in the above, i.e., Basic, DA, and retaining allowance. However, if your Basic and DA component is less than the minimum wage rates as declared by the appropriate government for your category of employment, you are liable to pay contributions, including on all allowances.

Regards

Thank you for the information. I will be taking Basic and DA. May I know which of the options below I should choose to calculate the cutoff of Rs. 15k for DE?

1)

Thank you for the information. I will consider Basic and DA for calculating the 12% contribution. Could you please clarify which of the following options I should consider when determining the cutoff of Rs. 15k to decide who falls under the PF net:

1. Basic + DA + HRA + all other allowances = Gross salary
2. Basic + DA + all other allowances (excluding HRA)
3. Basic + DA (only) as used in calculating the PF contribution of 12%

Additionally, could you provide examples of Retaining allowances?

Thank you in anticipation, Sir.

Warm regards,
Ravi

You have to consider only Basic + DA for the eligibility of PF membership. However, please note that:

1. If an employee is already a member of PF earlier, he should be covered under PF even if his B+DA is above Rs. 15,000.

2. Once a member of PF, he is a member of PF even if his B+DA is increased and exceeds Rs. 15,000.

Retaining allowance is given to an employee just to retain him in employment when the employer is unable to provide work to him throughout. This system of paying retaining allowance, I heard, is/was in existence in West Bengal.

Regards.

Dear Keshav Sir,

Thank you very much for a very clear explanation on the subject. This is something that I needed to know for a very long time. Appreciate your efforts, sir!

Thank you,
Ravi

If the basic salary of an employee is below the minimum wage, then we have to consider Basic + Special allowance for PF calculation. Am I correct? Please clarify the same.

Thanks in advance,

Regards,
Jadughar

I too have a query: What are the wage components for the deduction of PF admin charges, EDLI contribution, and EDLI admin charges?