Can we directly deduct the PF amount of Rs.1800 from an employee, or is it mandatory to calculate 12% on 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 amount of contribution to be made by the employer is set at a rate of 12% of Rs. 15,000, which is Rs. 1800.

However, the employer and employee, on mutual agreement, can calculate based on the actual Basic + DA if the amount is more than Rs. 15,000.

As per the provisions of the EPF & MP Act, 1952, 12% contribution is to be deducted on the basic salary, and the statutory ceiling is Rs.15,000/-. The definition of basic is, except HRA, all other components are 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.

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