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Dear Sir,
Will you please clarify my doubt regarding the EPF payment shall pay on minimum wages or on the part of minimum wages as the (Basic+DA)?
Expecting to get the experts clarifications on this ASAP.....
Phani kumar
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It has been clarified that EPF contribution has to be reckoned on full Basic Pay +DA as notified and it cannot be a part of the notified rate .
KK sir, Thanks for the reply and for contract labour ....
can we split the salary(just higher than Minimum Wages) as ( Basic+DA) + others..
What is the meaning of MW to be followed....Either Full salary equal to MW or (Basic+DA) equal to MW? very confusing....
It is clarified by that the EPF contribution is based on the basic salary + DA. not on minimum wages.
The minimum wages for various trades are notified by the respective state governments from time to time and has two components - basic pay & DA. You have the freedom to adjust the amount into basic pay, DA and other allowances so long as the notified total minimum wages is paid. As stated, you are paying more, so no problem in this regard.
PF is deductible on Basic Pay and DA. There has been widespread malpractice of keeping basic pay & DA at ridiculously low levels and showing maximum salary in allowances not attracting PF contribution. Looking to this position, it has been clarified by EPFO that the PF coverage has to there for the notified Min. Wages.
Dear Member,
The contribution of EPF should be made as per the provisions of Wages as defined under the EPF Act. There is no compulsion to contribute more than the wage cap limit (Rs.15000/-).
The concept of Minimum Wages is totally different and it is having two main components like Basic and DA. The industries which are paying more than the minimum wages shall have certain allowances for certain administrative convenience. If the split is made with an intention of subterfuge or with a malafide intention to reduce statutory liability then it should be questionable and it attracts the contribution. Otherwise, the EPF authority is having no right to ask the employer to contribute on the minimum wages.
However, there are so many cases are pending before the HC and SC to get what is an exact definition of "Basic Wages" as qualifying for EPF Contribution.
You can not split the minimum wages as (Basic+DA) rather to consider the rate is as Basic. Further the EPF attracts to wages compnent shown as Basic, DA, 75% HRA and if other allownce payble to workman. On split of minimum wages attracts penal damage and intrest by the authority. You can at best follow the limit where as not contributing above the limit.
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