Industrial Relations And Labour Laws
Asst.manager -hr
Bhardwaj Tilak
Executive H.r
Dy. Manager (hr)
+2 Others

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In our company allowance are basic, da, hra, conveyance, medical, child, and special allowance. Pl. Guide me which of allow. Are considered for pf deduction
Dear Friend, Except HRA, all other allowances considered as Basic.
Thanks sir for your prompt reply Can we exclude employee from epf if basic and other allowances more than 15000
request you to give us an example
Pl. see below example Basic 11125 DA 3894 Conv 890 Special Allow 1720 Gross 17629 Pl. tell me in above case PF applicable or not
if all allowances are more than 15000, in that case PF is to deducted or not
If this is the salary on his joining, then he can be excluded.On the other hand, if he has been a member of PF (existing member) you should continue contributing at least on Rs 15000. This applies to a new joinee whose salary at the time of joining your establishment is more than Rs 15000 but was a PF member with his previous company and he has not withdrawn that PF on leaving that company.
In appointment letter we are mentioning only Basic salary and Basket , here basket means-allowances in which employee are claiming as per the convenience of income tax rules, like H R A, Conv. etc
In this scenario although we are paying different components ( H R A , Conv. ) in salary slip ,but same are not mentioned in appointment letter as we stated above
Please let us know for the existing employee can we increase H R A ( here basic will remain same ) and merged all other allowances in H R A subject to maximum of 50% or 40 % to overcome the liability of P F
R K dixit

My advise is NO, because even HRA as a component of salary which is also part of the gross salary earned by an employee while on duty or on leave should be part of PF qualifying salary. What we have to note is that it is the salary including HRA which is considered for deducing salary if one has taken a few days leave without pay or it is the same gross salary including HRA which is paid if he is on leave with pay. that means if he is paid HRA outside the salary, based on the category of city of residence and employee grade, like what is being given to officers of public sector banks, then only it can be excluded from PF qualifying salary.
Is there a limit on HRA as a % of Basic. Typically companies have 60% of Basic to 100% of baic. Can HRA be more than 100% of Basic?

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