Calculation of EPF

[Pradeep Kaushik]

Respected All,

 

I have a doubt about Arrear Calculations for PF. Pls. clarify the proper method of deduction in following case where PF Basic Salary restricted To Rs. 6500.00 -
1) In the month of Sept 2010 Employee Basic Salary - 6000.00
2) Employee PF Deducted In Sept 2010 - Rs. 720.00
3) In The Month Of Oct 2010 Basic Salary Revised w.e.f. Sept 2010 - Rs. 8000.00

In The above given case what would be the deduction amount towards PF -
Basic Salary in Oct 2010 - Rs. 8000.00
Basic Salary Arrear in Oct 2010 - Rs. 2000.00
1) Minimum of (Basic Salary+Basic Salary Arrears, 6500) *12%
= min((8000+2000),6500)*12%
= min(10000,6500)*12%
= 6500*12%
= Rs. 780.00

2) (min(Basic Salary For Oct 2010 Month,6500)*12%)+(min(Revised Basic Salary for Sept 2010,6500)*12% - PF Already Deducted in Sept 2010)
=(min(8000,6500)*12%)+(min(8000,6500)*12%-720)
= (6500*12%)+((6500*12%)-720)
= 780+(780-720)
= 780+60
= 840.00
Which one is the correct method?

 

Pl. Suggest.

 

Regards.

 

Pradeep Kaushik

AI Summary

Correct PF Deduction Method: Calculate Separately for Revised and Previous Months; Cap Salary at Rs. 6500 for Accuracy. An individual inquired about the correct method for calculating provident fund (PF) deductions when an employee's basic salary is revised retroactively. The scenario presented involves a basic salary increase from Rs. 6000 to Rs. 8000, effective from September 2010, with PF deductions based on a salary cap of Rs. 6500. Two calculation methods were proposed: one using the combined salary and arrears and the other using separate calculations for each month. The response confirmed that the second method, which involves separate calculations for the revised and previous months, yielding a total deduction of Rs. 840, is correct.