Dear All, Now a days i am listening that PF deduction would be on gross salary shortly as like ESIC deduction. Pl discuss on that as some seminar is also going on the same.
From India, New Delhi
Labour Consultant
Pan Singh Dangwal
Joint Manager
Sr Executive
Korgaonkar K A
Hr Consultant
+1 Other


gross or consolidated salary is concept, however PF is still applicable on Basic + DA, but it is observed that few establishments split the salary in bogus allowances, to evade the EPF contribution
There are reasonable concept of HRA, Conveyance, Medical and education allowance, However these allowances can not exceed the 100% of the basic salary. so naturally the EPF eligible salary can not be less than, 50% of the gross salary.
labor department is keeping watch on such incidents and soon they will issue guidelines.

v shakya

Dear Krishna,
Generally companies split the salary into various component to pay the lower contributions toward employees benefits.
As per sec 2(b) EPF will be chargable on Basic plus DA No where it written that salary cannot be bifurcate or EPF will be payable on minimum wages.
However the madras high court has given the judgement that except HRA all the other allowances shall be treated as the part of basic salary to pay EPF contribution. The review petition is filled & this case is pending before the supreme court?
Thanks & Regards
HR & Labour, Corporate Laws Advisor

From India, Agra
Pan Singh Dangwal

Dear V Shakya, U S Sharma,
There are various decisions / petitions pending on the issue related to Wages definition for PF deduction.
I have one strong query, whether the specified minimum wages can be further splited into Basic+HRA+Conv. Etc. For example, if the Minimum Wages for the state is Rs. 10,000.00, whether the employer (for PF calculation) can split this into Basic-Rs. 5000 (Being 50% of gross), HRA-2500 (50% of Basic), Conv. 1600 & Special Allowance Rs. 900.
If there is any court decision (Cleared & Final) study related to the matter, pls share the same.

From India, Delhi

As long as you are paying salary more than the Minimum Wages by splitting salary into various components, you are not violating the law. Therefore many organisations are taking advantage of it by showing lower Basic Pay to reduce the PF and Gratuity liabilities.
As far as Bonus is concerned, you are required to pay minimum Bonus of Rs.7,000/- if the employee has worked for full year without any deduction in salary. Here you are not allowed to take advantage of lower Basic pay. i.e. even an employee is getting Basic pay of Rs.4,000/- p.m. he will get annual Bonus of Rs.7,000/-.

From India, Thane
v shakya

Dear Pan Singh,
EPF authorities is not empowers to fix the wages for PF chargability. therefore they cannot force the employer the pay PF contribution on minimum wages. Hence you can split the salary for EPF contribution. but do ensure all the other components should not be more then 50% of basic salary. however punjab & Haryana High court and EPF tribunal has also permitted the bifurcation of salary for PF contribution.
Punjab & haryana High court judgement and EPF tribunal copy is attached here for your kind reference?
Thanks & Regards
HR & Labour, Corporate Laws Advisor

From India, Agra

Attached Files (Download Requires Membership)
File Type: pdf Splitting_of_minimum_wages_for_PF_permitted_-_EPFAT_30.11.2015 (1).pdf (670.3 KB, 170 views)
File Type: pdf punjab___haryana_high_court_permitted_bifurcation_of_minimum_wages_for_epf.pdf (61.5 KB, 114 views)

EPF is now mandatory to all those whose salary is less than Rs.15,000 so companies split the salary into various component to pay the lower contributions toward employees benefits and employer is also required to make a matching contribution.
From India, Vadodara

Dear All Sr
Please provide any one circular or notification or gazette notification regarding showing 50% of basic of gross salary or rest allowances percentage or this is sole discretion of management

From Australia, Lane Cove
korgaonkar k a

Dear Satish ji,
There is no such circular or notification or gazette notification on 50% of basic to gross salary. You need to pay Basic plus DA component as per minimum wage Act if it defines minimum wage as Basic plus DA.
Also there is no law as to the salary is to be splitted in to various components, except in some States there is a law on HRA.

From India, Mumbai

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