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VIJAY1985
Sir/Madam,

I request you to clarify the doubts related to EPF calculation,

One of the company is calculating and Deducted employee contribution of PF amount as following

Basic + DA + Special Allowance + Children Education Allowance = 4500+9400+500+200= 14600 * 12 % = 1752

Is it Correct ? Kindly clarify .

From India, Ramanathapuram
PROFESSIONALS AND BUSINESSES PARTICIPATING IN DISCUSSION
Madhu.T.K
Seasoned Ir Professional
Drsivaglobalhr
Doctor Siva Global Hr
VIJAY1985
Assistant Professor

drsivaglobalhr
309

Dear Colleague,

As per the Supreme court ruling pronounced on 28 February 2019, in a general words, all allowances in question are to be treated as wages for the purpose of provident fund (PF). Kindly read the very good article on this subject. The given working is correct as per the ruling if the components are arising out of contract of employment and the allowances shown are to be construed as Basic Wages. Hence it seems to be right.

https://www.moneycontrol.com/news/bu...s-3667041.html

From India, Chennai
VIJAY1985
Dear Sir,

Thank you so much for your valuable suggestion. It is really helpful to me. Moreover, In that salary slip, HAR amount Rs.5116, Washing Allowance Rs. 225, Night Duty Allowance Rs.600 and RH Amount Rs.641 also given but they have only considered and included Children Education Allowance & Special Allowance for calculation.

As per PF act provision, Basic + DA + Retaining allowances have given. But they have considered especially above mentioned emoluments only.

That is why i confused. Kindly clarify sir.

From India, Ramanathapuram
drsivaglobalhr
309

Dear Colleague,
PF is to be deducted in Basic+ DA+ Retaining Allowance and for 15k. If there are other allowances included then for arriving 15k depending on the allowance and its nature it will form part of Basic as per the judgement in 2019, wherein the Hon'ble SC has once again relied on the principles of ‘universality’ and ‘contingency’ as laid down in the earlier judgements and pronounced the following principles to test the applicability of PF to different allowances (by whatever name called):

• whether an allowance is linked to any greater output from the employee/linked to an incentive;

• whether an allowance is by nature, variable;

• whether an allowance is paid only to those who avail the opportunity;

• whether an allowance is being paid across the board to all employees in a particular category.
Hence your components are subject to these evaluations. Kindly read the article given in the link in the earlier reply so that you will get full clarity.

From India, Chennai
Madhu.T.K
4193

It is the definition of Basic wages which is confusing for many employers. The basic wages means the TOTAL wages as per agreement and it should include all allowances which are payable universally to all employees. if you have special allowance as an allowance paid to a particular category of employees based on their special skills that can be excluded from wages. Similarly, if you have house rent allowance given to some employees who are asked to stay somewhere near to the office for business purpose, that can also be excluded. All other allowances would qualify for PF deduction. Obviously, the PF authorities cannot demand a contribution on amount above Rs 15000.
From India, Kannur
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