Salary components for EPF Contribution

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This query is : Resolved

Quick Summary

This discussion clarifies the correct method for calculating Employee Provident Fund (EPF) contributions. The standard practice involves deducting 12% from a sum that includes Basic Salary, Conveyance Allowance, and Special Allowance, capped at a maximum contribution based on Rs. 15,000. It's confirmed that including 'special allowance' in the calculation is permissible and legally supported.

Rajiv

Rajiv (Querist)
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05 December 2020 Hi Everyone,

We have bifurcated salary in below components:-

Basic Salary
HRA
Conveyance Allowance
Special allowance

But while calculating EPF contribution, we are adding Basic Salary, Conveyance allowance and special allowance and we are deducting 12% from this amount as employee contribution but if it crosses limit of 15000/- as per EPF then we are deducting 12% on maximum of Rs. 15000/-.

Please advise is it the right way of doing deduction for EPF.

Thanks

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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05 December 2020 Yes, it is the right way of doing deduction for EPF.

Rajiv

Rajiv (Querist)
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05 December 2020 Dear Sir,

Thank a lot for quick response.

Can we continue with 'special allowance' component in salary but will deduct EPF as already conveyed in last query.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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05 December 2020 Yes , you can do it case law favours it.

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