Provident fund query

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Querist : Anonymous

Querist : Anonymous (Querist)

02 May 2015 Is there any rule that basic salary should be 50% of CTC for calculating PF??

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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02 May 2015 There is no such rule at present.
Employees as well as employers may have to shell out more towards Employees Provident Fund (EPF), with the government proposing to include all allowances in the wages for deducting PF contribution.

Querist : Anonymous

Querist : Anonymous (Querist)

02 May 2015 Is it mandatory that the basic salary should be 50% of total gross salary?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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02 May 2015 It is not mandatory it is left to the option of employers. Salary structure is fixed in such a way that employees get maximum tax benefit.

CTC: Cost to company
Gross Salary: Basic+DA,HRA,Conveyance,Mediacl and other allowances
Net Salary: Gross-Deductions(PF,ESI,LOP,Loan in advance)

Basic = 50% of the salary in metro cities & 40% in non metro cities(Some companies follow 30 to 35% slab for Contract employee)
HRA = 50% of the Basic salary
Conveyance = 800 per month
Medical Alloawance = 1250 per month
Education = It is based on employee grade
Performance commission = to balance off the gross
Other allowances: Uniform,Coupons,etc.,

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