How much EPF contribution should deduct from the basic salary of the employee?
For EPF, an employee contributes 12 per cent of the basic salary while the employer contributes 8.33 per cent towards Employees’ Pension Scheme and 3.67 per cent to employees’ EPF.
What is the maximum salary for EPF deduction?
Rs. 15,000 per month
The total contribution i.e., voluntary + mandatory can be up to Rs. 15,000 per month. The member can also contribute on higher wages i.e., greater than Rs. 15,000 but only up to a maximum limit of 100\% of the PF wages, provided they get permission from the APFC/RPFC as per the provisions of para-26(6) of the scheme.
How do you restructure your salary to make it tax friendly?
Under the new rules, wages should be at least 50\% of the total remuneration of the employee. Wages includes basic salary, dearness allowance and retaining allowance. If the allowances and other benefits exceed 50\% of the total income of the individual, the amount above 50\% will be treated as part of the wages.
On what basis salary is taxable?
Advance salary received by an employee is taxed in the year of receipt. The rule behind this is the basis of taxability of salary, i.e., salary is taxed on due or receipt basis, whichever is earlier. However, an employee can claim relief under section 89 (discussed later) in respect of advance salary.
Is PF not mandatory for salary above 15000?
If you are drawing a salary higher than Rs. 15,000 per month, you are termed a non-eligible employee and it is not mandatory for you to become a member of the EPF, although you can still register with the consent of your employer and approval from the Assistant PF Commissioner.
Is reduction in EPF contribution transferable to take home salary?
This appears to indicate that the reduction in EPF contribution by the employer is not meant to be transferred/added to the take home salaries of the employees because if this were to happen then there would be no net ‘relief’ for the employer organisations.
What is the current EPF contribution rate for employer and employee?
If employer’s EPF contribution is part of the CTC of an employee, then both the employer and employee can continue to contribute at 12 per cent despite the recent reduction in the EPF contribution rate (by the government).
What do employees need to know about EPF tax break?
Employees need to know that contribution to their EPF accounts can be claimed as tax break in case their salary falls in taxable bracket. The government has reduced both employer and employee contribution to the latter’s EPF account from 12\% of employee’s salary to 10\% for next 3 months, as part of its coronavirus relief measures.
Is your EPF contribution not part of the CTC?
Here is how. If EPF contribution by the employer is not part of the CTC, then employee has two options. The government has reduced both employer’s and employee’s contribution to the Employees’ Provident Fund (EPF) account from 12 per cent of employee’s pay to 10 per cent for the next three months.