Is My PF Deduction of Rs. 1,800 on a Gross Pay of Rs. 28,200 Correct? Seeking Clarity!

Hi Team, Below are my salary details:

- Basic: Rs. 12,000
- HRA: Rs. 6,000
- Conveyance: Rs. 800
- Special Allowance: Rs. 6,650
- Medical Allowance: Rs. 1,250
- Food Allowance: Rs. 1,500

Gross pay = Rs. 28,200, out of which my company is deducting Rs. 1,800 as PF. Can anybody please explain to me whether the deducted PF amount is correct or not?

Hi Kirubakaran N, as per the current PF rules, the deduction should be at a rate of 12% on (Basic + DA). In the above-given salary package, there is only "Basic," so it applies to 12,000. Therefore, it has to be (12,000 X 12%) with a maximum of 1,440/- deduction. You can ask the concerned HR about the excess deduction.

Hope this will help. All the best.

Mr. Kibakaran,

Your company is calculating the PF wage at Rs. 15,000/-. EPFO recently raised the pension scheme wage from Rs. 6,500/- to Rs. 15,000/-. In this connection, your company is calculating the PF wage based on Rs. 15,000/- at 12%, which equals Rs. 1,800/-.

I hope your doubts have been cleared. If you require any further clarification, please feel free to ask.

Regards,
Sudharshanan

The 12% deduction on the PF ceiling of Rs. 15,000/- is Rs. 1,800/-, which has been deducted by your company. Hope this is clear.

The PF amount deducted was excessive. It should be ₹1,440, which is calculated as 12% of the Basic Pay of ₹12,000. Yes, recently there has been a change in the PF ceiling to ₹15,000 from ₹6,500. However, the basic rule remains the same.

Hope it is clear!

PF Wages According to Section 2(b) of EPF & MP Act 1952

Mr. Manoj Devda, I herewith furnish the PF wages mean according to Section 2(b) of EPF & MP Act 1952. All emoluments which are earned by an employee while on duty, on leave, or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but do not include:

- The cash value of any food concession.
- Any dearness allowance (that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living), house rent allowance, overtime allowance, bonus, commission, or any other similar allowance payable to the employee in respect of his employment or of work done in such employment.
- Any presents made by the employer.

For more details, kindly view the link: http://www.epfochennai.tn.nic.in/pdf/RO_basicwages.pdf

Regards,
Sudharshanan

It seems your employer does not want unnecessary litigation with PF officials regarding the wage/salary structure. Hence, they have deducted PF on the salary construed at the maximum to date. This is good, and there is nothing to worry about. In a short period, say by April, you will receive Form 23, which will reflect this fact.

Hello HR Bloods and dear Kirubakaran Bro, This is Ajay SP. My email id is [Email Removed For Privacy Reasons].

Understanding PF and ESI Eligibility

It's purely because of the ceiling of PF to Rs 15,000/-. If your salary is less than Rs 15,000/-, then you would be covered under the ESI Act. For a worker and his family to be eligible for the benefits of ESI, the worker should have been working in the organization for more than 78 days, and his salary should be less than Rs 15,000/-.

Since your salary is more than Rs 15,000/- (you are getting around 28K), you are not eligible under the ESI Act. Hence, they have taken the minimum ceiling amount for PF calculation. This Basic + DA is applicable for the calculation of PF only when the sum amount exceeds Rs 15,000/-. That is why you have been deducted Rs 1,800 (12% of 15,000). Hope you are clear now.

Employer Contribution and Future Savings

Also, please don't worry, bro, about PF matters in the near future too, because whatever amount they have deducted from you, the employer has to contribute the same amount too from their treasury. Hence, they will be more cautious in this matter. Ha ha. EPFO is mainly for our future savings & protection scheme. Hence, happily contribute more to it. You can also avail the facility of additional PF. For more details regarding Additional PF, please feel free to mail me.

Thank You :)

Recently, the government of India raised the amount from ₹6,500 to ₹15,000. So, 12% of ₹15,000 is calculated as ₹15,000 * 12/100 = ₹1,800. This amount is correct. No issues.

Clarification on PF Calculation

To all those mates who stressed on Basic + DA for PF calculation...

Basic + DA for the PF department is different from the Basic + DA set as per minimum wages. For the PF department, 70% of the total salary or ₹15,000, whichever is lower, is the PF salary. So in this case, ₹15,000 is lower than 70% of ₹28,200. Therefore, the amount ₹1,800 is correct.

Even if the Basic was ₹11,000 and DA was ₹3,000 in this case where the total salary is ₹28,200, the PF deducted has to be ₹1,800.

You may kindly refer to rule 2a of PF...

With effect from September 01, 2014, the EPF limit has been revised. Now, Rs 15,000/- is the maximum limit of basic salary for the deduction of EPF, at 12% on Rs 15,000 and above the basic salary amount. So, 15,000 * 12% = Rs 1,800/-. However, since your basic salary is less than Rs 15,000/-, therefore, your actual 12% on Rs 12,000/- = Rs 1,440/-. Please ask your HR for the excess deduction; it may be arrear EPF also since your question is not clear on the deduction, whether it is one time or every month.

As per the new rule, a 12% deduction on the PF ceiling of Rs. 15,000/- amounts to Rs. 1,800/-, which has been deducted by your company. This is the correct amount to be deducted.

Thanks

As per the latest PF rules, the minimum basic should be Rs. 15,000/-. So, as per that, 15,000 * 12% = 1,800. This rule is effective from September 2014.

Thanks & Regards,
Anil M

You mentioned that as per the PF rules, the minimum basic should be Rs. 15,000/-. However, I am not sure about this because deciding the minimum basic of any employee is not under the jurisdiction of PF authorities. Could you please provide any link or circular regarding this?

If an employee receives a salary of more than Rs. 15,000/-, but only Rs. 4,000/- is shown as basic on his payslip without any other components such as DA, should we deduct PF on the basic amount of Rs. 4,000/- or must we deduct PF on Rs. 15,000/-?

I would greatly appreciate it if anyone could provide me with a concrete rule regarding this.

Thank you.

As per the recent revision, the PF basic is INR 15,000, and the deduction will be 12% of it, i.e., INR 1,800. Therefore, the calculation is accurate.

PF Deduction Explanation

Your PF deduction is correct as per the calculations:

- **Employee Share:** 12%
- **Employer Share:** 3.67% + 8.33%

For a basic salary of ₹12,000, the calculations are as follows:

- Employee Share: ₹1,440
- Employer Share: ₹440 (3.67%) + ₹1,000 (8.33%)

Total Contribution

- A/C 01 Employee Share + Employer Share: 12% + 3.67% = ₹1,880

This is your part of the CTC (Cost to Company).

Regards

Team, please visit the link below for further clarifications: https://www.citehr.com/521814-pf-calculation.html

I do agree that the limits of PF wages have been increased. However, if his basic salary is ₹12,000, then how can the employer deduct based on ₹15,000?

Your company is calculating the PF wage at Rs. 15,000/-. EPFO recently raised the pension scheme wage from Rs. 6,500/- to Rs. 15,000/-. As per this, your company is calculating the PF wage from Rs. 15,000/- at 12% = Rs. 1,800/-. However, it should be calculated on the basic salary, which is 12,000 * 12% = Rs. 1,440 only. You can discuss this with HR regarding this matter.

Regards

Thank you for the information. I have a doubt regarding PF deduction. As per my understanding, PF is deducted from the basic salary, not the net salary. If the basic salary is less than 15,000, then we calculate the PF as per the ESI Act, which is based on 12,000 only. Please correct me if I am wrong. Can you please provide clarification on this matter so that I can understand the PF deduction process better, specifically whether it is based on the net or basic salary?

Regards,
Kashish Sandhu

If his basic is ₹12,000, on which amount should PF be deducted? ₹12,000 or ₹15,000?

And if his basic is, suppose, ₹16,000, then on which amount should it be calculated?

Hi Guys, there has been a change in the PF ceiling from Rs. 6,500/- to Rs. 15,000/-. However, this change is effective from April 1st, 2015. Am I right?

Regards, Harinisha Prabhakaran

There has been a change in the PF ceiling from Rs. 6,500/- to Rs. 15,000/-. However, his basic pay is only Rs. 12,000/-. If it is equal to or more than Rs. 15,000, then only Rs. 1,800 will be applicable.

Regards,
Harinisha Prabhakaran

PF Ceiling Increase and Calculation Clarification

The PF ceiling has increased from ₹6,500 to ₹15,000, but the calculation of PF is still based on Basic + DA and not on Gross salary. Therefore, based on the given salary details, your deduction will be ₹1,440, not ₹1,800. You may verify the excess amount details with the HR department.

Hope this clarifies.

Thank you,

Regards,
Sandeep Krishnan R.

PF Calculation Based on Basic + DA

As per the current PF Act, the PF should be calculated on Basic + DA. In the above-mentioned salary breakup, DA is not being shown, only Basic Rs. 12,000 is being mentioned. It means that PF should be deducted at 12% on Basic only. Hence, the deduction of Rs. 15,000 is excessive. Please report this to your HR/Accounts.

Regards,
Vinay