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New pf calculation for salaried person

karmesh (consultant) (32 Points)

11 December 2012

Hello Experts,

Can someone provide some guidelines on new pf calucation based on basic+allowonces? Which is given in today's times of india.

https://m.timesofindia.com/business/india-business/Save-more-in-provident-fund-but-take-home-less-as-salary/articleshow/17563456.cms

How salaried people will be affected?

Weather it will be implmented from next FY or so?

Regards,

Karmesh Kshatriya

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NIHAR RANJAN (SERVICE) (210 Points)
Replied 11 December 2012

Sonu Iyer, partner, Ernst and Young, points out a possible shelter that could be available in respect of employees in India. Proviso to paragraph 26A of the PF Scheme allows PF contributions by the employee as well as the employees on a maximum notional level of Rs 6,500 per month, instead of the entire salary (including various allowances). The rate remains the same at 12% each for the employer and employee contributions respectively. "Not many employers have opted for this route, as PF is part of the employees cost to company and it also gives a tax shield to the employees. Now, if the employer organisation suddenly wishes to exercise this option and compute PF contributions only against Rs 6, 500 per month, it is not clear whether the PF authorities will oblige," Iyer explains.