Hi Team,
I have a query on PF calculation. For example, an employee's monthly fixed basic is 18,618, and the gross is 40,000. Based on his basic, we deduct 12% for PF, which amounts to 2,234. However, last month, the employee had 7 days of Loss of Pay (LOP), and his basic was 14,895 with a PFable gross of 27,000. Our software calculated 12% on 14,895, resulting in 1,787.
PF Calculation Guidelines
The client mentions that when the basic is less than 15,000, we should consider the PF gross, and if it's above 15,000, we should use 1,800 as the PF CAP. There is some confusion regarding which approach is correct. If the fixed basic is less than 15,000, we subtract the HRA from the gross and then calculate to reach the 1,800 cap. However, if the fixed basic is above 15,000 and due to LOP falls under 15,000, should we still follow the gross - HRA concept or directly deduct 12% from the basic after LOP deduction?
Current Process
Just for your information, our current process is as follows: for employees with a fixed basic less than 15,000, we calculate gross - PF excluding components at 12% to reach the 1,800 CAP. For those with a fixed basic above 15,000, we directly apply 12% on the basic for calculation.
Thank you.
From India, Bengaluru
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I have a query on PF calculation. For example, an employee's monthly fixed basic is 18,618, and the gross is 40,000. Based on his basic, we deduct 12% for PF, which amounts to 2,234. However, last month, the employee had 7 days of Loss of Pay (LOP), and his basic was 14,895 with a PFable gross of 27,000. Our software calculated 12% on 14,895, resulting in 1,787.
PF Calculation Guidelines
The client mentions that when the basic is less than 15,000, we should consider the PF gross, and if it's above 15,000, we should use 1,800 as the PF CAP. There is some confusion regarding which approach is correct. If the fixed basic is less than 15,000, we subtract the HRA from the gross and then calculate to reach the 1,800 cap. However, if the fixed basic is above 15,000 and due to LOP falls under 15,000, should we still follow the gross - HRA concept or directly deduct 12% from the basic after LOP deduction?
Current Process
Just for your information, our current process is as follows: for employees with a fixed basic less than 15,000, we calculate gross - PF excluding components at 12% to reach the 1,800 CAP. For those with a fixed basic above 15,000, we directly apply 12% on the basic for calculation.
Thank you.
From India, Bengaluru
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PF Calculation and Attendance
PF is always linked to attendance. Therefore, if the basic (PF qualifying salary) is reduced due to Loss of Pay (LOP), then that reduced basic salary should be used for PF calculation. If you use Rs. 15,000 for PF calculation for 23 days (7 days LOP), it will yield incorrect values. The number of days for which wages are not paid is very relevant for Pension Fund contribution.
From India, Kannur
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4526PF is always linked to attendance. Therefore, if the basic (PF qualifying salary) is reduced due to Loss of Pay (LOP), then that reduced basic salary should be used for PF calculation. If you use Rs. 15,000 for PF calculation for 23 days (7 days LOP), it will yield incorrect values. The number of days for which wages are not paid is very relevant for Pension Fund contribution.
From India, Kannur
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Salary Sheet & PF PT Calculation & Challan.xls
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(Fact Checked)-Your input is correct. LOP indeed impacts the PF calculation, as it's based on the reduced basic due to unpaid days. Keep up the good work! (1 Acknowledge point)