Regarding Basic & Pf - Pdf Download

There is an act called Maharashtra minimum HRA act
It provides that every worker will be entitled to HRA of 5% of wages.
Ofcourse it's minimum and employer can give more.
The intended effect is that apart from minimum wages the worker gets 5% more.
Effectiveness ? I think none.....
But most laws make years ago are not effective anyway today .

Mr. Bannerjee,

Please dont go by your knowledge. I have precisely mentioned you the act. Kindly go through that and get refreshed. Why 30 % of HRA is said. Understand that clearly before you get into discussion. HRA is a component where you can have employer benefit by excluding from the PF segment. (Maximum ceiling of 30 % HRA)

We have personally experienced from the EPFO office in regards to the PF payment. Other than HRA every component of your company pay structure whatever way you design has to to be brought into PF deduction.

Why we say Basic 40 % to 60 % ? It is to curtail the cost of employer going high. To restrict the Basic within the minimum criteria of 40 % atleast. If you increase the basic obviously the cost of employer will increase. So we need to sustain with the minimum requirement of fulfilling EPFO act. Just imagine what will happen if you keep Basic 100 %. It may be benefit for the employee and not for the employer. Just be sensible gentleman.

To englighten yourself I suggest you to clarify this point with your Regional Office in person through your known source. We generally dont pay PF for other components. But for your better clarification kindly approach EPFO and the act mentioned.

This I categorically mentioned because we were the victim of PF Office and had to adjust with them. The method you know.

I would appreciate if you can inform me after clarification. Thank you.

Dear Satish,

Excuse me for my blunt reply, but as you have been blunt, i have decided to be very frank in my post.

This is what happens when we do not read the Act properly. The PF officer has taken you for a royal ride. Kindly check the attached circular, which clearly says that PF is only deducted on Basic+DA+any retention allowance. Rest other allowance do not form part of the PF deductions.

Also the Basic being between 35% to 60% is not a rule any where, it is clearly a thumb rule and this is adopted for cost saving purposes on varying basis by companies.

Therefore before we criticize anybody kindly know the facts for sure. The entire intention of asking if there is a law for Basic being mandatory was as you have mentioned that those percentage were mandatory as per statutory law. Which itself is false. None of the statutory rules says any percentage.

The HRA to be 40% or 50% is again only for Tax benefits on HRA as per the IT act. (40% for non metro cities and 50% for metro cities).

So before you can say that we speak only on our knowledge, please be aware of the laws and rules, yourself. If you have any statutory rule, which says any percentage as mentioned by you, please share the official annexure for the same.

Regards,

Ashutosh Thakre

Thank you soo much all for your valuable reply. This will really help me in taking decisions.
One thing i want to make confirm that if we are offering 50000/- to a newly hired employee & if he is already contributing into PF with earlier company then by default we must include him into PF. Is it?

Yes you need to include him in the PF, as it was earlier a member of the PF. You can limit the deductions to Rs. 12% of Rs. 15,000/- p.m. thou.
Regards,
Ashutosh Thakre