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....
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.
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.