Understanding PF Deductions: Is a Flat Rs. 1800 Deduction Allowed or Must It Be 12% of BASIC and DA?

Greetings all, can we directly deduct the PF amount of Rs. 1800 from an employee, or is it mandatory to calculate 12% on BASIC and DA? If yes, please share the related document for reference.

Hi, The minimum contribution by the employer is set at 12% of Rs. 15,000, which amounts to Rs. 1,800. However, the employer and employee can mutually agree to calculate based on the actual Basic + DA if the amount exceeds Rs. 15,000.

As per the provisions of the EPF & MP Act, 1952, a 12% contribution is to be deducted from the basic salary, and the statutory ceiling is Rs. 15,000/-.

Definition of Basic Salary

The definition of basic is that, except for HRA, all other components are considered basic only (i.e., all those components which are being paid across the board in the company). Shift allowance or attendance bonus, etc., need not be included.

Employer's Contribution to PF

If the employer pays the PF contribution up to Rs. 15,000/-, it is more than enough. Paying a PF contribution for a basic salary more than Rs. 15,000/- is at the discretion of the employer. There is no mandate.