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

Dear all, Under PF Act, what were the items not covered basic wages & Da in PF wages register. Help me. Thanks& Regards Balamurugan. 9566233410
28th March 2011 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
28th March 2011 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.
28th March 2011 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
28th March 2011 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
28th March 2011 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.
29th March 2011 From India, Selam

Attached Files
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File Type: pdf RO_basicwages.pdf (22.2 KB, 6356 views)
File Type: pdf wages.pdf (7.2 KB, 3102 views)
File Type: pdf EPF ALL DETAILS.pdf (206.5 KB, 4541 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/-
29th March 2011 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
29th March 2011 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.
29th March 2011 From India, Selam

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File Type: pdf Gujarat_Cypromet_Ltd._vs_Assistant_P.F._Commissioner_on_26_July,_2004.pdf (110.4 KB, 1641 views)
File Type: pdf Regional Provident Fund Commissioner Vs. Presiding Officer Employee Provident Fund.pdf (214.1 KB, 1318 views)
File Type: pdf Mathuradas_Kanji_And_Ors._vs_Labour_Appellate_Tribunal_And_..._on_7_April,_1958.pdf (94.7 KB, 708 views)
File Type: pdf PF judgement on Min wages-P & H HC.pdf (64.7 KB, 1611 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
30th March 2011 From India, Madras
Dear Ramachandran, It is 12% simple interest. Please go through the Section 7 of the PF act I am enclosing it for your reference. S.Sethupathy, Excellent HR Services, Erode
30th March 2011 From India, Selam

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File Type: doc Determination of moneys due from employers.doc (41.0 KB, 233 views)

dear friends,
though the definition of wages is as given above, pf authorities would like to interpret it in a very wide manner beneficial to the employee. the intention behind splitting up the salary given to the employee will be considered by them. according to them, the purpose of "other allowances" is to avoid provident fund payment on that amount. in such cases, they usually ask 50% of such allowance also to be considered as "wages" & pf to be remitted for that also.
beena.p.nair
31st March 2011 From India, Madras
Dear sir, Please find attached the file of PF & Misc prov. Act, 1952. Thanks Balamurugan
31st March 2011 From India, Madras

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File Type: pdf Emp provt fund n misc prov act, 1952.pdf (267.9 KB, 270 views)

Thanks Bala for the handy act collection.
I am adding few more files discussing about the wages to be covered as Basic for PF Coverage.
The anomalies and ambiguities in this regard must be cleared.
I am expecting a detailed discussion among our members to get it cleared for all new comers to this forum
S.Sethupathy,
Erode.
31st March 2011 From India, Selam
Here the files are enclosed for your reference.
31st March 2011 From India, Selam

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File Type: doc a discussion on PF Wages.doc (56.0 KB, 252 views)
File Type: pdf Basic Wages-S.Jain.pdf (223.2 KB, 231 views)
File Type: pdf PF- on minimum wages-EPF appellate tribunal-Award against Deptt..pdf (112.4 KB, 264 views)

Dear all,
A worker is earning Rs. 225/- per day, and for a month he receives Rs. 5850/- per month for a 26 working days.
Here we are treating the gross salary into two parts i.e. 60% of total salary treating as basic & Da. remaining total 40% of salary treating as HRA & other allowances.
60% of total salary i.e. BAsic & DA is considering for PF calculation.
100% of total salary is considering for ESI calculation.
a) this method is correct or wrong?
b) according to minimum wages total salary is to be considered for PF calculation?
Thanks
Balamurugan
1st April 2011 From India, Madras
Dear All

Let me give some more clarification in this subject since it is burning for a quite long time. No doubt as per section 6 of EPF & MP Act, 1952, the PF Contribution is payable on basic wages. dearness allowance and retaining allowance if any. To that extent it is clear but the PF inspectors are referring the Section 2(b) of the same Act, where in the definition for "basic wages" is given. According to that definition basic wage means all emoluyments which are earned by an employee while on duty or on leave with wages in acciordance with the terms of the contract of employment and which are paid or payable in cash to him but does not include house rent allowance, overtime allowance, bonus, commission etc. When an employer is paying some amount on account of conveyance allowance, night shift allowance, washing allowance or special incentive, then the Inspectors are insisting the PF contributions on it also. Some how, it is being managed at this Region but it is not full proof. Hence I suggest that a clear cut definition of wages for pf contribution is required.

with regards

sanagapalli
3rd April 2011 From India, Hyderabad
Dear all, we all are disusing about employee salary and PF ,ESI rite;
here i will give you some examples ,assume a employee is ctc 15000/ month.
Basic 40% on 15000 *40/100 = 6000
HRA 40% on 6000 *40/100 = 2400
Conveyance 800 (fixed)
Medical allowance 1250 (fixed) if the employee is ctc is morethan 15000 no medical allowance and no esi
Special allowance 4550
__________
total 15000
___________
Pf =12% on 6000= 720
ESI=1.75% on 15000= 262.5
__________
total 982.5
__________
Net payable salary per month: 14017.5
Note:
1.we have to calculate PF on 6500 only ,when basic pay is less than 6500 we can calculate pf on actual amount only.
2.Basic pay, HRA normally its 40 % only but its depends on company and city then it will be 50% .
I hope You can understand
Thanks
vinoth.
11th April 2013 From India, Hyderabad
Dear Seniors, If one person was worked 2 month continously and also member of provident fund . Who has left job and expired. Who is intitle for family pension benefit. Please advice. Regards
4th June 2013 From India, Delhi
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