Hi, I am from Kerala. I would like to know about the updated PF, ESI, and TDS calculation steps. On what basis, Basic or Gross, are PF and all other terms calculated?
What are all the salary heads we can consider to maintain an HR policy in an organization? Please also share how employee and employer PF, ESI, and other deductions on salary should be maintained.
If anyone has an updated payroll calculation sheet, please share.
Thank you
From India, Kochi
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What are all the salary heads we can consider to maintain an HR policy in an organization? Please also share how employee and employer PF, ESI, and other deductions on salary should be maintained.
If anyone has an updated payroll calculation sheet, please share.
Thank you
From India, Kochi
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Regarding salary structure, it depends on employer policy how much they show in basic, DA, HRA, conveyance, and others.
Regarding PF, it is deducted 12% from basic + DA.
Regarding ESIC, it is deducted 1.75% from gross salary (ceiling is 21000/- from 01/01/2017).
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651Regarding PF, it is deducted 12% from basic + DA.
Regarding ESIC, it is deducted 1.75% from gross salary (ceiling is 21000/- from 01/01/2017).
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Confusion About PF Calculation: Basic vs. Gross
As per my knowledge, PF is calculated on Basic + DA, but recently I read an article about PF on https://www.hinote.in/calculate-pf-o...-of-pay-part-i. They mentioned that PF needs to be calculated on gross pay, not on Basic.
The article quotes: "According to the PF Act:
1. PF contribution should be calculated on 'basic wages' (plus DA, cash value of food concession, and retaining allowance, if any); and
2. Beyond basic wages (plus DA, cash value of food concession, and retaining allowance, if any) of Rs 6500 per month, the PF contribution is not mandatory but can be made if employees and employers so wish.
Let us examine the above in greater detail.
Basic wages, as stated in the PF Act, is not the same as the 'Basic' head of pay.
Here is what is stated in Section 2b of the PF Act:
2(b) 'basic wages' means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include:
(i) the cash value of any food concession;
(ii) any dearness allowance, that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living, house-rent allowance, overtime allowance, bonus, commission, or any other similar allowance payable to the employee in respect of his employment or of work done in such employment;
(iii) any presents made by the employer.
Now I am confused about how to treat this!
If I am getting Rs 15,000/- p.m. and my salary split-up is like:
Basic: 9,000/-
Other allowance: 6,000/-
In this situation, on what should I calculate my PF? On Total or on Basic?
As per the PF Act, Basic Wage means all my benefits...
Can anyone help me in this situation?
Regards
From India, Kochi
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As per my knowledge, PF is calculated on Basic + DA, but recently I read an article about PF on https://www.hinote.in/calculate-pf-o...-of-pay-part-i. They mentioned that PF needs to be calculated on gross pay, not on Basic.
The article quotes: "According to the PF Act:
1. PF contribution should be calculated on 'basic wages' (plus DA, cash value of food concession, and retaining allowance, if any); and
2. Beyond basic wages (plus DA, cash value of food concession, and retaining allowance, if any) of Rs 6500 per month, the PF contribution is not mandatory but can be made if employees and employers so wish.
Let us examine the above in greater detail.
Basic wages, as stated in the PF Act, is not the same as the 'Basic' head of pay.
Here is what is stated in Section 2b of the PF Act:
2(b) 'basic wages' means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include:
(i) the cash value of any food concession;
(ii) any dearness allowance, that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living, house-rent allowance, overtime allowance, bonus, commission, or any other similar allowance payable to the employee in respect of his employment or of work done in such employment;
(iii) any presents made by the employer.
Now I am confused about how to treat this!
If I am getting Rs 15,000/- p.m. and my salary split-up is like:
Basic: 9,000/-
Other allowance: 6,000/-
In this situation, on what should I calculate my PF? On Total or on Basic?
As per the PF Act, Basic Wage means all my benefits...
Can anyone help me in this situation?
Regards
From India, Kochi
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ESI & PF CALCULATION.xls