Why PF contribution had taken from Basic earned wages only - CiteHR
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Dear All
Please clarify my doubt
Why EPF contribution of 12% (as per section 2b sub cls I,II,II) is deducted from earned basic wages only, why does not inclued gross wages for contribution ?
Regards
Isaiyas

The intention of the legislation was simple, give a percentage of Basic wages. Because basic wages are the representation of wages paid irrespective of the place of work. Thus it is true wages. That is the reason.
Many establishments are bifurcating the wages into various allowances ignoring the judgments of Gujarat, Madhya Pradesh and Madras High Courts in holding that all allowances except HRA will form part of 'basic wages' to attract provident fund contributions.  Appeals are pending in the Supreme Court against these judgments.  Some of the allowances include as under:
 

Special Allowance (irrespective of any specialisation), •City Compensation Allowance,  •Tiffin Allowance, •Night Shift Allowance, •Hardship Allowance, •Supplementary Allowance, •Punctuality Allowance, •Attendance Allowance, •Children Education Allowance, •Travelling Allowance, •Uniform Allowance, •Washing Allowance, •Tea Allowance, •Canteen Allowance, •Leave Travel Allowance, •Milk Allowance, •Make Up Allowance, •Newspaper Allowance, •Regularity Allowance, •Suspension Allowance, •Medical Allowance, •Production Allowance, •Heat Gas and Dust Allowance, •Meal/Food Allowance, •Overtime Allowance, •Wellness Allowance, •Performance Allowance, •Field Working Allowance, •Re-Location Allowance, •Compensatory Allowance, •Cash Handling Allowance, •Supervisory Allowance, •Steno Typist Allowance, •Computer Allowance, •Conveyance Allowance, •Area Allowance, •Driver Allowance, •Cycle Allowance, •Entertainment Allowance, •Non-practising allowance, • Additional allowance, •Club Allowance, etc. etc.
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The intention of the legislation was simple, give a percentage of Basic wages. Because basic wages are the representation of wages paid irrespective of the place of work. Thus it is true wages. That is the reason.
In above mentioned since basic wages are paid for the place of work, along with the basice wages all other wage components will be paid,
Why 12% is taken only from basic wages, why not included any other components of wages, what is the specific reason to take only from basic wages?

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