Rajendra Paragi
Hr Professional
Pratheekshaa
Senior Manager - Human Resources
Tanaji
Service
+2 Others

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Dear Team,
I would like to know contract Labour PF salary for PF deduction.
Whether need to deduct only for Basic + DA or need to deduct for Gross salary.
Please clarify and share the amendment or circular docs from concern authority.

According to the Employees Provident Fund and Miscellaneous Provisions Act, 1952 , called the PF Act, the statute which governs Provident Fund contribution, the PF contribution should be calculated as 12% of “basic wages” (plus DA, cash value of food concession, and retaining allowance, if any), subject to a maximum of Rs 15000/- per month. In case an employee earns basic wages (plus DA, cash value of food concession, and retaining allowance, if any) of more than Rs 15000 per month, they can opt for a higher PF deduction (more than 12% of Rs 15000) at the joint request of the employee and the employer.

All above declared by the govt. in the Employees Provident Fund and Miscellaneous Provisions Act, 1952 , called the PF Act

Kindly go thru the attachment for if we deduct the pf only on Basic it is the Part of "Splitting of the Minimum wages" and it is not Permissible. Kindly refer one court case under section 7A.

It was also directed to review all such cases disposed of u/s 7A of the Act where determination of dues has taken place on wages lesser than Minimum Wages.


Attached Files
File Type: doc PF Amendment dated may '11.doc (31.0 KB, 102 views)

Please note that you need to deduct PF on Basic wages, DA, retaining allowances, any value of food concession or tiffen allowance. If these forms part of your Gross wages you have to pay PF for it. If your basic and DA is very lesser than other allowances of your Gross Wages then you may have an issue that you are paying other allowance s purposefully to reduce EPF contributions
In the PF act, what is the components of basic wages are explained.
According to the act, Basic wage+DA+Food concession (i.e.Meals/food/tiff in allowances) + Retaining allowance will be part and parcel of Basic wages on which PF contributions to be deducted either in permanent or contract employees wages.
This is very clear. Besides, it is better to keep the basic wage to at least 50% of total wage as a rationale method, but not below 50%. The other allowances can be at 50%. In such case, no authority will question normally.

yes pf should be duducted on basic +da Or minimum wages as announced by state government. regards, Rajendra
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