Read with the notifications published by the state governments giving the minimum wages list,mits is very clear that basic + da or basic +special allowance should be at least equal to the minimum wages.
The other allowances that you are giving are additional benefits that of are providing. It is not counted in minimum wages. Companies do these funny structures to try and save a little money on PF
There a re companies fighting in the court in this matter, as is also the PF department. Current Supreme Court decisions make it likely that they will decide the same way. It's then for you to take a risk of being on the losing side and paying penalty and interest or revising your salary structure to comply.
The Minimum Wages components are (i) Basic Wages & (ii) DA or VDA. All the establishments must pay the Minimum Wages to all its employees. In the Minimum wages only statutory deductions are authorised (PF, ESI & TDS). Except the above nothing can be deducted.
As a matter of fact the Cost of Living Points (CPI) of certain year will be considered as Base Year and the Points derived will be considered as Basic Wages and the escalation taking place in every six months/year it will be added as Variable DA / DA. The Both are to be added together and thus the Minimum Wages calculated.
The PF Department has told about the bifurcation for calculating the PF is not accepted and entire Minimum Wages must be considered for calculating the PF. To save some minimal amount some companies are adopting the bifurcation system like basic wages and DA and they are calculating the PF only on Basic Wages, which is a wrong practice.
This is what the circular intended to say and it does not argue about non existence of bifurcation of minimum wages.
However political pressure can not suppress the matter for ever and at some time it will come back with a vengeance. The fact that it is supported by a high court decision giving detailed reasoning for now allowing PF on gross wages makes it more likely that the decision will ultimately prevail