I have gone through several discussions and found that:
1. PF is deducted at 12% of the Basic Salary + DA. For example, if the basic salary is 6500 for any employee, his PF deduction would be ₹780. Right?
2. However, if the basic salary is more than 6500, let's say, ₹22,750, then what would be his/her PF deduction? For example: 22,750 x 12% = ₹2,730.
Now, what I want to know is whether my second calculation is correct or not. Is ₹780 fixed for those who are drawing more than a basic salary of ₹6500? Is there any rule that ₹780 is the maximum amount that can be deducted as PF deduction?
From India, Delhi
Acknowledge(0)
Amend(0)
1. PF is deducted at 12% of the Basic Salary + DA. For example, if the basic salary is 6500 for any employee, his PF deduction would be ₹780. Right?
2. However, if the basic salary is more than 6500, let's say, ₹22,750, then what would be his/her PF deduction? For example: 22,750 x 12% = ₹2,730.
Now, what I want to know is whether my second calculation is correct or not. Is ₹780 fixed for those who are drawing more than a basic salary of ₹6500? Is there any rule that ₹780 is the maximum amount that can be deducted as PF deduction?
From India, Delhi
Acknowledge(0)Amend(0)
As per my knowledge, there are some PF conditions:
1. EE-0 ER-0
2. EE-Ceiling ER-Ceiling
3. EE-Actual ER-Ceiling
4. EE-Actual ER-Actual
Most companies will follow the 2nd option, where regardless of the Basic amount, only ₹780 should be deducted from the employee, and the Employer Contribution will be based on the ceiling. If the Basic is less than ₹6500, both EE and ER contributions will be calculated on the actual amount. For example, if the Basic is ₹3500, then both EE and ER will contribute ₹3500 * 12%.
If the Basic is more than ₹6500, then only ₹780 will be deducted from both EE and ER.
In the 3rd condition, if the EE pays based on their actual amount, for instance, if the Basic is ₹20000, then EE will contribute ₹20000 * 12%, while ER will contribute based on the ceiling, for example, ₹6500 * 12%.
However, most companies tend to follow the 2nd option.
I hope this clarifies your concept.
From India, Mumbai
Acknowledge(0)Amend(0)
4291. EE-0 ER-0
2. EE-Ceiling ER-Ceiling
3. EE-Actual ER-Ceiling
4. EE-Actual ER-Actual
Most companies will follow the 2nd option, where regardless of the Basic amount, only ₹780 should be deducted from the employee, and the Employer Contribution will be based on the ceiling. If the Basic is less than ₹6500, both EE and ER contributions will be calculated on the actual amount. For example, if the Basic is ₹3500, then both EE and ER will contribute ₹3500 * 12%.
If the Basic is more than ₹6500, then only ₹780 will be deducted from both EE and ER.
In the 3rd condition, if the EE pays based on their actual amount, for instance, if the Basic is ₹20000, then EE will contribute ₹20000 * 12%, while ER will contribute based on the ceiling, for example, ₹6500 * 12%.
However, most companies tend to follow the 2nd option.
I hope this clarifies your concept.
From India, Mumbai
Acknowledge(0)Amend(0)
As per my knowledge, there are some PF conditions:
1. EE-0 ER-0
2. EE-Ceiling ER-Ceiling
3. EE-Actual ER-Ceiling
4. EE-Actual ER-Actual
Most companies will follow the 2nd option, where whatever the Basic is, they should deduct only ₹780, and the Employer Contribution will be on the ceiling. If the Basic is less than ₹6500, then it will be calculated on the actual amount. For example, if the Basic is ₹3500, then ₹3500 * 12% from both EE and ER. If it is more than ₹6500, then only ₹780 from EE and ER.
In the 3rd condition, if EE is paying on his actual, like Basic is ₹20000, then it will be ₹20000 * 12%, but ER will contribute on the Ceiling, for example, ₹6500 * 12%.
However, almost all companies will follow the 2nd option.
Hope your concept is clear.
From India, Mumbai
Acknowledge(0)Amend(0)
1. EE-0 ER-0
2. EE-Ceiling ER-Ceiling
3. EE-Actual ER-Ceiling
4. EE-Actual ER-Actual
Most companies will follow the 2nd option, where whatever the Basic is, they should deduct only ₹780, and the Employer Contribution will be on the ceiling. If the Basic is less than ₹6500, then it will be calculated on the actual amount. For example, if the Basic is ₹3500, then ₹3500 * 12% from both EE and ER. If it is more than ₹6500, then only ₹780 from EE and ER.
In the 3rd condition, if EE is paying on his actual, like Basic is ₹20000, then it will be ₹20000 * 12%, but ER will contribute on the Ceiling, for example, ₹6500 * 12%.
However, almost all companies will follow the 2nd option.
Hope your concept is clear.
From India, Mumbai
Acknowledge(0)Amend(0)
Rimpi Tyagi, There is no law to the effect that you cannot deduct more than Rs 780/-pm towards EPF from the employees salary. Varghese Mathew 09961266966
From India, Thiruvananthapuram
Acknowledge(0)Amend(0)
From India, Thiruvananthapuram
Acknowledge(0)Amend(0)
Thank you all for your valuable inputs. So, it is optional for the employee as to how much he/she wants to get his/her salary deducted as PF, but most of us follow that second option.
What is the Payroll System?
My second question is: What is the payroll system? Is it attendance preparation, leave records, salary preparation, and ESIC, PF, Gratuity deductions, or is there something more? Does it include tax calculation and payment as well?
Regards,
From India, Delhi
Acknowledge(0)Amend(0)
What is the Payroll System?
My second question is: What is the payroll system? Is it attendance preparation, leave records, salary preparation, and ESIC, PF, Gratuity deductions, or is there something more? Does it include tax calculation and payment as well?
Regards,
From India, Delhi
Acknowledge(0)Amend(0)
Thank you all and thank you, AADI, we just got 5 holidays, 3 RH, and 18 CL (1.5 per month); that's all written in our leave policy. Could you please share any format for leave management?
I have understood PF; thanks for your directions. ESIC deduction percentages are 1.75% (Employee) and 4.75% (Employer), if I am not wrong?
TDS Deduction Explanation Needed
Now, please explain TDS Deduction. I am completely new to this.
Regards,
Anchal
From India, Delhi
Acknowledge(0)Amend(0)
I have understood PF; thanks for your directions. ESIC deduction percentages are 1.75% (Employee) and 4.75% (Employer), if I am not wrong?
TDS Deduction Explanation Needed
Now, please explain TDS Deduction. I am completely new to this.
Regards,
Anchal
From India, Delhi
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
Rules for Statutory Deductions Exemptions Perquisites-Pay roll.doc