Confused About EPF Deductions for Salaries Over 25,000? Let's Clarify the Calculation!

Hi Sir/Madam,

Please suggest how to deduct EPF. Our employees' salary is more than 25,000 per month. Do we need to calculate EPF on Basic + all Allowances - HRA or only on Basic 12%?

Thank you.

Dear Friend,

Keep your basic capped at 15,000 (including all allowances except HRA) and calculate it at 12%. If your employee's basic is more than 25,000, then your calculation will cap at 15,000 * 12% = 1,800.

Hi Ravi,

We are deducting 12% on basic (unrestricted), so there is no capping of 15000. The effective new rule of judgment on EPF is whether we should deduct on Basic + All Allowances - HRA or only on Basic 12%.

Thanks

Dear Friend,

Basic salary and all allowances (except HRA) will be considered for PF deduction of 12%.

If the basic salary is less than ₹15,000 per month, then the PF deduction will be based on (monthly gross - HRA). However, if the basic salary is ₹15,000 or more per month, there is no need to add all allowances except HRA as the PF authority controls contributions up to ₹15,000 of the basic salary per month.

If the organization decides to contribute on the higher side for PF, they may follow the same formula for all employees (monthly gross - HRA).

Thanks & Regards,

S K Bandyopadhyay (Howrah, WB)

[Login to view]