Saswatabanerjee
Partner - Risk Management
M Choudhury
Hr Manager
+1 Other

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In the company I am associated with, we have been contributing employees provident fund at a rate of 12% of basic salary.
Basic salary was calculated at 30% gross salary.
Thus if an employees gross salary is 10000, PF contribution = 10000*30%*12% = 360INR
However, we have been intimated from our PF office that the contribution should be 12% of Gross salary - HRA
Thus if gross salary is 10000, and HRA is 1200, PF contribution = (10000-1200)*12%=1056
Please suggest if the above calculation of using gross salary minus HRA is correct.

Gross-hra limited to 15k is generally accepted by PF Office.
The law requires you to pay on basic and DA
Allahabad high court gave a decision saying that all other allowances excluding overtime and HRA is covered in the definition. However, the Supreme Court is hearing an appeal. And the government has put the implementation on hold.
So you are not required to change your procedure at the moment

Pls read following reference which I have come across-
Gujarat, Madhya Pradesh and Madras High Courts have held that all the allowances other than House Rent Allowance will be treated as part of basic wages to attract provident fund contributions. Being aggrieved, some of the employers have filed Special Leave Petition in the Supreme Court vide SLP (C) No.8781-8782/12 under the caption of Surya Roshni Limited. After about 6 years, now the appeals are fixed for final hearing on 03.07.2018. It is pertinent to state here that the Madras High Court in its judgment dated 17.04.2018 in W.P.No.22127 of 2014 titled as M/s.Techset Composition India (P) Ltd., v. The Regional Provident Fund Commissioner-(C&R) has concluded as under:
“The learned counsel for the petitioner states that the 7(A) proceedings had been concluded and a final order has been passed. However, the order so passed need not be implemented till the final disposal of the case pending before the Hon'ble Supreme Court of India cited supra.”
Accordingly, those who are facing such proceedings under sec. 7-A of the Employees Provident Fund and MP Act can take up the plea that till the matters as pending is disposed of by the Supreme Court, no order (when adverse) be implemented.

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