There can be different interpretations for gross wages and PF qualifying/ contributing wages when it is a case with regard to an employee whose monthly salary exceeds Rs 15000. An employer is under no compulsion to pay PF on an amount exceeding Rs 15000, though many employers contribute on entire salary or at least entire Basic (plus DA) without restricting it to Rs 15000. This is the case with most of the big companies whereas medium sized companies and small companies would go for restricting it to 12% of Rs 15000.
In the former case, the PF qualifying Gross Salary is Rs 180000 per annum (15000 X 12). Therefore, the first interpretation of gross salary is that it is a salary subject to a maximum of Rs 15000 per month or Rs 180000 per annum. At the same time, if your establishment pays PF without any salary ceiling, then it can be the amount on which PF is deducted. This is the second interpretation and as per this interpretation and continuing the example given by Nandini, the gross salary is Rs 92788 per month or Rs 1113451 per annum.
Now had the employee been in receipt of a salary less than Rs 15000, certainly, his other allowances would also attract PF. That means in the case of an employee whose salary is not more than Rs 15000, the PF qualifying salary is not just Basic salary and DA but it is the gross salary less HRA. That means, PF qualifying salary should include all such allowances which are paid while an employee is on duty or on leave except HRA. There has been a misconception that among us that PF is payable only on Basic salary and dearness allowance. Certainly, it is true that PF is payable only on Basic wages and DA but what is basic salary has been defined very clearly in section 2(b) of the EPF & MP Act as the whole emoluments payable as per contract of employment except HRA. Therefore, basic wages shall include allowances also. With regard to treatment of special allowance, we have a quite number of court verdicts which say that special allowance paid to all the employees should be taken as part of salary whereas if it is paid to a particular employee considering his special skill or some kinds of hardship to which he is exposed to during the course of employment, then such an allowance shall be excluded from salary.
Hope this will clear the doubts of Nadini.
Madhu.T.K