Is Provident Fund Deductible on Salary Arrears? Urgent Help Needed!

Hi HR friends,

Please let me know, is PF deductible on arrears on the increments? And if yes, then how is it deductible and in what way do we have to submit it to the PF office?

Please, urgent.

Regards,
Rajeev Dixit

Dear Rajeev,

Salary is composed of various components. Yes, once there is an increment or arrears, PF will be deducted or paid on the "Basic + DA" portion of the salary.

PF on increment or arrears is to be deposited just like your normal monthly installments to the bank, and the information for it will have to be furnished along with your monthly return (Form 12A, challans, etc.).

Regards,
Manish

Dear friend,

Certainly, the arrears of increment are subject to PF deduction. In the case of an employee for whom the PF contribution is restricted to Rs. 6500 wages, then his PF contribution need not be deducted over and above 780. If there is no such practice, then the PF is to be deducted for pay (basic + DA) plus arrears of increment.

Thanks,
P. Ramachandran

Hey Guys,

Can you explain more about arrears? Suppose a company has decided to give increments to its employees for the last 3 months. How would the company pay arrears and how would ESI/PF deductions on arrears be calculated? How should these deductions be furnished to the ESI/PF departments, considering we cannot change the format of the government-prescribed returns? How do we specify ESI/PF deducted on arrears in monthly, half-yearly, and yearly returns? Kindly clarify with some calculation examples.

Regards,
PRABHJOT S. KASHYAP
Sr. Executive - Relationship Development

Ludhiana (INDIA) | New Jersey (US) | Ontario (CANADA) | Victoria (AUSTRALIA)