Understanding PF Calculations: Should Monthly Bonuses Be Included?

Dear Professionals,

Is PF to be calculated on the statutory bonus that we are paying monthly?

And what components are excluded from PF calculation in CTC?

Thank You,

Hi, Bonuses are to be paid on an annual basis. While it is okay to include them in the CTC (Cost To Company) component, there is no need to consider them for PF (Provident Fund) calculation.

Dear Lakshmi Narayanan sir, is it possible to pay bonuses monthly instead of annually?

Payment of Bonuses

Payment of bonuses is to be made within eight months of the close of the financial year. As such, you cannot distribute it over 12 months. When you pay it monthly, the amount will attract ESI in the case of those covered under ESI.

When it comes to the matter of statutory bonus, please follow the rules as per the act (as better explained by Madhu Sir) because initially, how can you decide the allocable surplus and percentage of bonus? However, if you still want to include it in the cost center, ESIC will be applicable on these amounts.