Understanding PF Contributions: How to Calculate When Salaries Are Below Rs. 6,500?

Dear all,

As per the act, employer contribution on PF has to be calculated based on the minimum wage ceiling. The minimum wage ceiling has been increased from Rs. 6,500 to Rs. 15,000. According to the Supreme Court judgment, PF is to be contributed on basic wages including the variable allowance.

For example, if the employee's basic salary + allowance is Rs. 5,000 (whether PF to be contributed on Rs. 5,000 or Rs. 6,500). Similarly, if the employee's basic salary + allowance is Rs. 12,000 (whether PF to be contributed on Rs. 12,000 or Rs. 15,000).

If you have any notification with reference to this, kindly forward the same.

Thanks in advance.

In the scenario where an employee's salary falls below Rs. 6500, the PF employer contribution calculation is crucial. With the recent increase in the minimum wage ceiling from Rs. 6,500 to Rs. 15,000, it is essential to understand the correct calculation method. According to the Supreme Court ruling, PF contributions should be based on basic wages inclusive of the variable allowance.

To address the query:
1. For an employee with a basic salary + allowance of Rs. 5,000, the PF contribution should be calculated based on Rs. 5,000.
2. For an employee with a basic salary + allowance of Rs. 12,000, the PF contribution should be calculated based on Rs. 12,000.

It's advisable to refer to official notifications or circulars for precise guidelines on PF calculations in such cases.