Understanding PF Changes: Is My Proposal for Adjusting Employee Deductions Correct?

Hello all, I have recently joined an organization where we pay employees on a consolidated scale. I would like to confirm my understanding regarding the change in the PF ceiling wage to INR 15,000 per month.

For a gross monthly income of INR 12,000, our current structure is as follows: Basic: INR 7,800, HRA: INR 1,800, CLA: INR 1,200, TA: INR 1,200. Currently, we are deducting PF amounting to INR 936 (7,800 * 12%).

To comply with the PF ceiling wage requirement, I am proposing the following structure: Basic: INR 12,000 so that the PF deduction will be INR 1,440 (12% * 12,000). Please confirm if this adjustment is accurate.

This proposal was discussed with my PF consultant.

The proposed change to increase the Basic component to INR 12,000 to align with the PF ceiling wage of INR 15,000 per month is correct. By adjusting the Basic salary component, you ensure that the PF deduction meets the required 12% of the new Basic salary. This adjustment will help in complying with the PF regulations and benefit the employees by ensuring their PF contributions are in line with the mandated ceiling. It's essential to communicate this change effectively to the employees to avoid any confusion and to ensure transparency in payroll practices. If needed, you can also provide a breakdown to the employees explaining the changes in their salary structure and how it impacts their PF contributions.