Cross financial Year Provident fund

[Former Member]

Dear Experts,

Please tell how does the provident fund for employee and employer processes when the payroll has been run for cross financial year.

How does the postings done.

Thanks & Regards

Revati

[BalaAP]

Hi Revati,

There are 2 methods of handling retro PF (1.Deduction Carry Forward method DCF, 2.Gross Carry Forward method GCF). DCF is common.

In DCF method, recalculated PF & pension amounts month by month and difference in the EE contribution is brought forward and deducted in the current month.

/3F1 & /3F2 are cumulated in /560 through /550. Difference is brought forward to current month via /551 (this is for deduction part from employee).

for payment, old /3F1 and /3F2 are reversed and new /3F1 & /3F2 are posted and payment is done to the PF trust.

/3F3 and /3F4 are ER's pf & pension amt, which is not affecting the EE's salary. They are debited to expense a/c and credited to liability a/c. In retro, old entries are reversed and new entries are posted.

Please show the above wage types (all /xFx & /5xx series WT's ) of current month so that we can understand.

regards,

Bala.

[Former Member]

Dear Bala,

The Retroactive PF amount needed to be posted but it never happened,instead the current month value was only posted. The value which needs to be posted was populated in wage type /ZF5 CF Pf monthly Rs 5321 and /6I2 CF Section 88 Investment Rs 5321.

Please tell how to post this amount in vendor account.

[jayantvenkata]

Hello

Please note that you would be able to see the impact of '/ZF5' in the IN period processing on wagetype '/3F5'.

This is because '/ZF5' would be having the impact of employees PF & VPF contributions from the retro periods & hence in turn would impact the employees PF & VPF contribution.

Employees' monthly PF & VPF contribution are captured in '/3F5' & hence '/ZF5' impacts this wagetype as whole. Please note that in case of retro when PF contribution changes, the same gets changed in the retro results itself in wage types /3F1 & /3F2. Now the difference between the previous PF contribution & the latest one is captured through wagetype /AF5, which is then carried forward to current IN period processing in wagetype /ZF5.

Please note that there is one more wagetype /551 which gets formed in retro processing by taking the difference between old net pay (/560) & new net pay calculated. This wagetype gets formed in every retro period & is then carried forward to IN period processing. This wagetype in turn impacts the net pay of current period.

Please note that whatever change has happened in PF contribution impacts wagetype /551 in retro periods & hence further it impacts /560 of current period. Wagetype /ZF5 which comes in RT of current period is just a notional wagetype which has been provided to just show that how much more PF contribution employee has paid. So, this wagetype need not be posted.

Hope the detailed explanation helps answer the query.

Do get back to incase you still have further queries

Thanks and Kind Regards

Ramana