P Ramachandran
Hr & Administrative Manager
Sethupathy-s
Legal, Training
Sanagapalli
Labour Laws And Financial Matters
+3 Others

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Dear all, Under PF Act, what were the items not covered basic wages & Da in PF wages register. Help me. Thanks& Regards Balamurugan. 9566233410
From India, Madras
Dear All
my question is, suppose an employee is drawn salary i.e. Basic = 5000, other allownce = Rs. 5000, so total salary is Rs. 10000.
here basic Rs. 5000/- includes basic pay & DA where pf contribution is Rs. 600/-
But here other allownaces = rs. 5000/- is exempt from pf contribution or not?
if it is exempt from pf contribution then what are the items exempt from the payment of Pf?
Thanks for your reply.
Balamurugan

From India, Madras
Dear Balamurugan
The provident Fund is payble only on Basic wages and Dearness Allowance or Special Allowance @ 12%. No other allowances need to be included for PF calculation. Also if the total of Basic + DA is more than Rs. 6500/- per month then you need to deduct PF only on Rs. 6500/- @12%. Example: If the wages paid to an employee is Rs 5000/- Basic and Rs 3500 DA totalling to Rs 8500/-. In this case law permit you to deduct the PF @ 12% on Rs 6500/- only.

From India, Mumbai
Dear sir,
But in Salem - PF inspector is quoting the below lines for paying of Pf contribution.
"basic wages" means all emoluments which are earned by an employee while on duty or 10[on leave or on holidays with wages in either case] in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include:
(i) the cash value of any food concession;
(ii) any dearness allowance (that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living), house-rent allowance, overtime allowance, bonus, commission or any other
similar allowance payable to the employee in respect of his employment or of work done in such employment;
(iii) any presents made by the employer;
Thanks & Regards
Please help me in this issue
Balamurugan

From India, Madras
Dear sir, Thanks for your reply. what is the minimum amount to be basic salary, DA, HRA and other allowances according to PF act. Thanks & Regards Balamurugan
From India, Madras
Dear All.
It is a long and unanswered discussion regarding the coverable allowances in PF act.
We the veterans in HR, are wondering for quite long time why the EPFO never settled this matter by issuing a clear notification on What is Basic and DA and which allowances are coverable etc.,
In the absence of such a clear notification, there are many interpretation in this matter, which leads to unnecessary complication in PF compliances.
However I am enclosing few articles available in EPFO web site here and few judgements in this regard in my next posting.
Please Keep on adding your views in this matter
S.Sethupathy.
Excellent HR Services,
Erode.

From India, Selam

Attached Files
File Type: pdf RO_basicwages.pdf (22.2 KB, 6359 views)
File Type: pdf wages.pdf (7.2 KB, 3105 views)
File Type: pdf EPF ALL DETAILS.pdf (206.5 KB, 4549 views)

Dear All

Let me give some more clarification on this issue. Section 29 of The Employees Provident Funds Scheme, 1952 clearly defines as follows:

The contribution payable by the employer under the Scheme shall be at the rate of twelve per cent of the basic wages, dearness allowance (including the cash value of any food concession) and retaining allwance (if any) payable to each employee to whom the Scheme applies.

This section clearly spell out that the PF contribution is payable only on Basic + DA. Food concession and retaining allowance is rarely given by any employer. So it is clear now that no other allowances can be included for PF contribution. The definition given in the PF Act is to restrain the employer's tactics of avoiding the PF contribution by giving some fancy names to the allowances.

The another aspect as to what should be the basic and dearness allowance can be answered by looking at The Minimum Wages Act 1948. The minimum wages are prescribed for each industry in the form of Basic wages + Dearness Allowance. If the salary structure is designed exactly as per the Basic + DA prescribed by Minimum Wages Act, then normally, PF department accepts it as a standard structure. Moreover, if the total of Basic +DA exceeds Rs. 6500/- per month, the employer is not required to deduct the PF contribution on excess wages than Rs. 6500/-

From India, Mumbai
Dear Murali,
According to Employees Provident Funds & Miscellaneous Provisions Act, 1952, "Retaining Allowance" means an allowance payable for the time being to an employee of any factory or other establishment during any period in which the establishment is not working. Thus this is for retaining his services.
Even during that period also that employees are to be covered under this Act, because anyway they will be back to normal wages.
S.Sethupathy,
Excellent HR Services,
Erode

From India, Selam
Dear Manish,
What you have stated in the above column are absolutely right. but the enforcement officers are now referring the case "Gujarat Cypromet Ltd V Assistant Provident Fund Commissioner" and insisted to contribute to all allowances except HRA. Because the single judge whom decided that case clearly stating that.
Coming back to Minimum wages, there is a new judgment decided in Feb 2011 at Punjab and Haryana High Court ,which allow us to bifurcate the Minimum wages also.
I give below some of the Judgments on PF wages ,hope these are all useful to all our members
S.Sethupathy,
Excellent HR Services,
Erode.

From India, Selam

Attached Files
File Type: pdf Gujarat_Cypromet_Ltd._vs_Assistant_P.F._Commissioner_on_26_July,_2004.pdf (110.4 KB, 1643 views)
File Type: pdf Regional Provident Fund Commissioner Vs. Presiding Officer Employee Provident Fund.pdf (214.1 KB, 1329 views)
File Type: pdf Mathuradas_Kanji_And_Ors._vs_Labour_Appellate_Tribunal_And_..._on_7_April,_1958.pdf (94.7 KB, 712 views)
File Type: pdf PF judgement on Min wages-P & H HC.pdf (64.7 KB, 1623 views)

Dear sethupathi sir, Please clarify what will be normal interest,the pf authorities charge on the amount as decided as escaped wages and it found payable even on appeal. Thanks in advance
From India, Madras

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