As the circular is initiated from PF office dated 30.11.2012 which in the context of Section 7-A (Determination of money due from employer). clarifies the definition of basic wages, based on which the PF is calculated. Their redefinition seeks to include other allowances made by employers under sundry heads.
The clarification circular, titled 'Splitting of wages', says the basic wage "encompasses all the payments except the specified exclusions which are mentioned as commissions. All such allowances which are ordinarily, necessarily and uniformly paid to employees are to be treated as part of the basic wages."
The circular, however, does not specify any criterion for identifying those allowances which are not excluded from PF.
The contribution envisaged under Section 6 with notification dated April 9, 1997, and para 29 of the EPF Scheme specifies the rate of contribution under the EPF Act as 12 per cent where workers pay 12 per cent of their basic wages as PF and employers are obliged to pay a matching contribution. The clarification is meant to help workers get a higher PF contribution from employers.
For further understanding please find the attachment ...
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The said circular has been kept in abeyance by the Minister of Labour as per latest mail recd. From Labour Law Reporter just now.
Advocate Dr. Ashok Chandok
Latest News = Reply from Labour Minister on PF Circular - Guidelines for Quasi-judicial proceedings under section 7A of the EPF&MP Act, 1952
PFA : PROVIDENT FUND CIRCULAR KEPT IN ABEYANCE : LABOUR MINISTER
Kindly Acknowledge the receipt of the same and oblige.
PROVIDENT FUND CIRCULAR KEPT IN ABEYANCE : LABOUR MINISTER
Union Labour and Employment Minister Mallikarjun Kharge on 13th December, 2012 said that the Circular November 30th, 2012 pertaining to Guidelines for Quasi-judicial proceedings under section 7A of the EPF&MP Act, 1952 issued by the EPFO on the inclusion of certain allowances etc. for calculating Provident Fund contribution is to be kept in abeyance. So the status quo will continue.
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This circular is nothing new. There has been some such instructions & judgments earlier also. In fact many cos. were/are following these instructions. What is funny now is many employees unions are opposing this circular as their take home pay is getting reduced if the instructions are followed by everybody. Also consider a write up on the subject attached.
I do not see what the hue and cry is about. The maximum of Rs 6500 is still in place. So Rs 780 is still the maximum PF payable by an employer from his side and so for employee. For new employees not enrolled in PF exemption is still allowed for employees if they so choose. So how does this change the situation? Also with minimum wages already at Rs 5000 plus in most cases I do not see what is the issue about.
This can only affect people who are splitting minimum wages into basic wage plus some allowances. For them this will be a issue.
In any case Rs 780 ( employer side 12% of 6500 ) plus Rs 780 ( employee side of Rs 780 ) could be the only PF deduction and the take home should not go less than Rs 1560/- .
If this is not correct please do enlighten me where in the circular it is so mentioned otherwise.
As you are aware inflation rates are in upward trend and rates of all the necessary items has increased steeply. How can an average middle class Indian can fulfill his basic requirements from above PF amount when he retires.
I think government should change the policy and take some more effective actions keeping in mind long time inflation rate. You can understand the critical position of a person retiring at the age of 58 especially private sector employees.
Government should think about middle class family. “Poor are becoming poor day by day”
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