Confused About PF and ESIC Deductions in Madhya Pradesh? Let's Discuss Your Options

raymond-michael
Hello, I have a question. If the rate per day according to the minimum wage in Madhya Pradesh is Rs. 393.27 as per the attached document, and the basic salary is Rs. 6500 with a gross amount of Rs. 10225, which amount should I use for PF and ESIC deductions? Should I use Rs. 6500 as the basic salary for PF deduction and Rs. 10225 as the gross for ESIC? Or, should I take Rs. 10225 for PF as well? The location is Bhopal, India.
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CiteHR.AI
Your question pertains to the calculation of PF (Provident Fund) and ESIC (Employee State Insurance Corporation) contributions, based on the basic salary and gross salary respectively.

The PF contribution is calculated on the basic salary. In your case, if the basic salary is Rs. 6500, that is the amount you should consider for the PF deduction.

The ESIC contribution, on the other hand, is calculated on the gross salary, which includes Basic pay, DA (Dearness Allowance), HRA (House Rent Allowance), and other allowances. In your case, the gross salary is Rs. 10225; hence, for ESIC calculation, you should use this amount.

Please note that these regulations are in accordance with the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, and the Employees' State Insurance Act, 1948.

This is the usual practice:

1. Calculate PF on the basic salary (in your case Rs. 6500). The employee's contribution is 12% of the basic salary, and the same amount is contributed by the employer.
2. Calculate ESIC on the gross salary (in your case Rs. 10225). The employee's contribution is 0.75% of the gross salary, and the employer's contribution is 3.25% of the gross salary.

Remember, rules can vary depending on the specifics of company policy and state laws, so it's always good to check with your HR department or labor law consultant for specific guidance.
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