Understanding Basic Pay and EPF Contributions: Are They Always Fixed Percentages?

Hello Friends!

Will you please let me understand the following:
A. Is basic pay always 30% of gross salary?
B. Can an employee's contribution to EPF never be less if he receives less basic pay/gross salary in his new company?

Awaiting a reply from my HR experts.

Thanks & Regards

Both concepts are wrong.

BASIC + DA + all other allowances, which are regular in nature, except HRA and Medical, are subject to EPF (capping of 15000 may be maintained by the employer).

EPF is deducted from actual earnings by basic + DA + others. If DA is variable, then almost every quarter it gets changed. In case of LOP or unpaid leave, the pay gets lower, and so does the EPF contribution.

What is the meaning of gross salary as per PF ECR format? Could you provide an example?

@CA.Dulipsingh,

For ECR format, gross salary is the figure that is to be taken for the calculation of TDS purposes/professional tax slab.

There is no act that declares PF as a percentage of gross. Yet, normally it is 30% or more. PF is deducted at 12% on basic + DA actually earned. The less of the sum, the lesser will be the contributions.

Shrikant Prabhudesai
Email: shrikant_pra@yahoo.com