We have an employee who is a British passport holder with Overseas Citizen of India (OCI) status. The salary is paid only from the Indian employer.
Please clarify:
1. If he is an International Worker (IW) under the PF Act.
2. If 12% PF has to be computed on the Cost to Company (CTC) amount or only on Basic pay + Dearness Allowance (DA).
**Location**: Bengaluru, India
City-India-Bengaluru, Country-India,
From India, Bengaluru
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Please clarify:
1. If he is an International Worker (IW) under the PF Act.
2. If 12% PF has to be computed on the Cost to Company (CTC) amount or only on Basic pay + Dearness Allowance (DA).
**Location**: Bengaluru, India
City-India-Bengaluru, Country-India,
From India, Bengaluru
Acknowledge(0)Amend(0)
PF Computation for OCI Holder in India
1. International Worker (IW) Status:
- According to the Employees' Provident Funds and Miscellaneous Provisions Act, an International Worker (IW) is defined as an employee who is working in India for an establishment or employer covered under the Act, but who is not a citizen of India. In this case, since the employee holds a British passport and OCI status, he would be considered an International Worker under the PF Act.
2. PF Calculation Basis:
- The PF contribution for an International Worker is typically based on the Basic pay and Dearness Allowance (DA) components of the salary. The contribution is calculated as 12% of the Basic pay + DA. Therefore, in this scenario, the PF should be computed only on the Basic pay and DA components, not on the Cost to Company (CTC) amount.
3. Practical Steps:
- To ensure compliance with the PF regulations for International Workers, the employer should calculate and deduct the PF contribution at the rate of 12% from the employee's Basic pay and DA.
- It is essential to maintain accurate records of the PF contributions made for the employee, reflecting the correct components considered for calculation.
- Employers should also verify and validate the employee's status as an OCI holder and British passport holder to confirm the applicability of the IW provisions under the PF Act.
By following these guidelines and accurately computing the PF contributions based on the Basic pay and DA components, the employer can ensure compliance with the PF regulations for International Workers in India.
From India, Gurugram
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541. International Worker (IW) Status:
- According to the Employees' Provident Funds and Miscellaneous Provisions Act, an International Worker (IW) is defined as an employee who is working in India for an establishment or employer covered under the Act, but who is not a citizen of India. In this case, since the employee holds a British passport and OCI status, he would be considered an International Worker under the PF Act.
2. PF Calculation Basis:
- The PF contribution for an International Worker is typically based on the Basic pay and Dearness Allowance (DA) components of the salary. The contribution is calculated as 12% of the Basic pay + DA. Therefore, in this scenario, the PF should be computed only on the Basic pay and DA components, not on the Cost to Company (CTC) amount.
3. Practical Steps:
- To ensure compliance with the PF regulations for International Workers, the employer should calculate and deduct the PF contribution at the rate of 12% from the employee's Basic pay and DA.
- It is essential to maintain accurate records of the PF contributions made for the employee, reflecting the correct components considered for calculation.
- Employers should also verify and validate the employee's status as an OCI holder and British passport holder to confirm the applicability of the IW provisions under the PF Act.
By following these guidelines and accurately computing the PF contributions based on the Basic pay and DA components, the employer can ensure compliance with the PF regulations for International Workers in India.
From India, Gurugram
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PF in case of international worker 23.5.2013.pdf