When the employers start paying PF on reduced amounts the EPFO people started insisting payment of PF at least on minimum wages. At that time the mandatory PF qualying salary was just Rs 6500 and whereas the minimum wages for unskilled worker was more than that. Moreover, the EPFO cannot direct the employers to pay minimum wages. If the employer is in a position to hire a worker at a wages less than the minimum wages he can hire him and the EPFO cannot question it. Therefore, if you are able to hire a worker paying, say, Rs 5000, you can do so but you should pay PF on the entire amount of Rs 5000.
House Rent Allowance is an allowance in the salary which is excluded from the PF qualifying basic wages. There is no mention about the percentage of HRA to the basic. Now the next attempt will be to increase the percentage of HRA so that our burden can be reduced. In order to curb the practice of paying higher amounts as HRA, the EPFO has worked out a percentage at par with the Income Tax exemption slab of HRA. The decision will come soon.
The Payment of Gratuity Act also defines Salary as the entire amount payable as per contract of agreement. As such it will be the gross salary which will form base for gratuity calculation.
Please follow the link.
12th March 2019 From India, Kannur
13th March 2019 From India, Mumbai
I am an employee of M/s. Palsons Derma Private Limited, confused about my PF deduction . As per my below mentioned salary structure what amount is deductible by the company .
Basic > Rs. 7908.00
HRA> Rs. 1977.00
Special Allowance >Rs.5551.00
My Gross Salary is Rs. 19119.00. Company is deducting my PF Rs. 949.00. (on basic @12%) but I knew from a source that as per Hon"ble Supreme Court recent order it is not corrcet.
Can you please confirm about the actual calculation of deductible Amount.
19th March 2019 From India, Kolkata
Special allowance 5551
Since this sum is more than Rs 15000, the employer can restrict his contribution to 12% of Rs 15000.
LTA being an amount payable annually will not form part of salary. Similarly, medical allowance is paid subject to production of bills or a declaration to its effect and hence not part of salary.
19th March 2019 From India, Kannur
I have an another question that an existing employee ( Working last 5 years above ) who is getting his monthly salary as per below format.
Medical Reimbursement 833.000
Special Allowance 19650.000
Gross Earning 50843.000
and his Provident Fund deducting Rs. 2562.00 (12% on Basic). Now The company has decided to reduce his Provident Fund Basic Rs. 15000.00 and deduct Rs. 1800.00 from his salary.
My question is being an employer can it be done for an Existing Employee?
22nd March 2019 From India, Kolkata
However, in practice and when you give offer to an employing saying that your "CTC" is so much, or Rs 53405,in the given case, this will not work out. In order to adjust it fairly, you will have to pay the difference of 2562 and 1800, ie, Rs 762 in some other way. Let him invest this amount by his own.
25th March 2019 From India, Kannur