PROFESSIONALS AND BUSINESSES PARTICIPATING IN DISCUSSION
Manager Hr & Admin
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snrajaryanImplication of the Supreme Court Decision:
The Supreme Court Decision will have wider implications depending on individual situation. For the employees in the lower scale of emoluments where amount considered for PF contribution is lower than fifteen thousands and who receive such universal allowance, not linked to efficiently, will get lower “in hand salary” as the employer is bound to take into account such allowances while deducting provident contributions. The employer himself will have to shell out more money in the form of employer’s contribution. Such employees will be able to accumulate larger corpus in their provident fund account at the time of their retirement.
For employees who are in receipt of higher salary with allowances but the contribution has been pegged at the base amount of fifteen thousand will not be affected by this supreme court decision. However for the employees in higher salary bracket and whose contribution is computed with reference to such higher amount of salary, the contribution toward provident fund will go up if they are in receipt of such allowance and which are not considered hitherto for PF contribution.
So in case your Cost to the Company (CTC) includes the employer’s contribution as well and the amount of contribution is going to go up due to Supreme Court Decision as discussed, your salary in hand will reduce due to increase in deduction from your Salary as well as your salary coming down to make for increased quantum of employer’s contribution.
From India, Hyderabad
Thanks for the time taken in sharing those implications on the same
As nut shell shall we continue what we are practising previously or else in corporate the PF contribution as mentioned by supreme court to all salary components for those who crossed the ceilings
From India, Chennai