Clarity needed on increased PF contribution as per new wage code

Hi friends,

I am seeing a lot of articles these days saying employees' take-home salary will be reduced once the new Wage Code is implemented because the PF contributions will increase - considering Basic will be capped at 50% of the Gross, and so on.

I am not able to understand this logic because there is a ceiling of Rs. 15,000 for PF calculation, and even if the Basic increases due to the new wage code, PF contributions may be capped at the ceiling limit of Rs. 15,000 only. Then how will the PF contribution increase? Can you shed some light on this?

Best Regards,
Kartik

Dear Kartik,

In cases where organizations limit their PF contribution to 15,000/-, there is no issue. However, there are organizations that pay based on actual Basic & DA, exceeding the 15,000/- statutory limit. For these organizations, there will be an additional cost due to the increase in Basic and DA (50% of total wages after the implementation of labor codes).

Thanks & regards,

S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions +91 98310 81531 skb@usdhrs.in USD HR Solutions – To strive towards excellence with effort and integrity