Understanding PF Deductions: How Should You Calculate for Contract Employees?

Hi,

What is the procedure for PF calculation on a contract employee's salary? For example, if one person's gross salary is 40k, with a basic of 20,000/-, should I deduct 12% on 20,000/-? Is this approach suitable for contract employees, or are there any differences as per the PF Act?

Please provide the details as soon as possible.

Thank you so much for your reply. But someone told me that PF is deducted from the gross salary for contract employees, not from the basic salary. Is this correct? Should I generate one challan for March 2015 for both contract and permanent employees? Please provide a reply.

Hello,

You have to deduct PF on basic only, not on gross salary. However, the employer also needs to pay a contribution of 12%. If the basic salary is Rs. 20,000, the PF contribution will be as follows:

Employees' Contribution:
- A/c. No. 1: 12.00% - Rs. 2400

Employers' Contribution:
- A/c. No. 1: 3.67% - Rs. 1150
- A/c. No. 10: 8.33% - Rs. 1250

Administrative Charges:
- A/c. No. 2: 0.85% - Rs. 170
- A/c. No. 21: 0.50% - Rs. 100
- A/c. No. 22: 0.01% - Rs. 2

TOTAL: 25.36% - Rs. 5072

Thank you.