If your friend's company had deducted PF from a fair amount these questions from the PF Enforcement Officer should not have arisen. In order to reduce burden of PF many companies show a very less amount as Basic Salary and the rest will be HRA, Conveyance Allowance, etc etc. PF being a social security arrangement for the benefit of employees, the Enforcing authorities will certainly try to enlarge the net by forcing the employers to remit on higher amounts. However as per the Act, PF is payable only on basic salary and Dearness allowance. But at the same time any other allowance which gives at least an indirect impression of salary can be taken as salary which qualifies contribution towards PF. In your salary break ups, TA and OA ( I don't know what all are these) may also be treated as salary unless you explain why these are paid. Therefore, you have to give clarifications to these components before the Asst. Provident Fund Commissioner when you are given an opportunity to be heard in person. (Usually, you will get a summons to appear before the Asst. Provident Fund Commissioner following section 7 A of the EPF & Misc. Provisions Act and that enquiry is referred to as 7 A enquiry.)
There are many issues connected with such lesser contributions and many issues are before various courts also.The PF authorities claim that PF should be contributed at least on minimum wages. But at the same time they have no right to enforce minimum wages because under the Minimum Wages Act the enforcing authority is the State's Labour department. If both these departments join their hands there could be some definite answer to the question on what minimum amount should PF be contributed. Till then PF department have their own circular saying that PF shall be calculated at least on 70% of the total salary subject to a maximum of Rs 6500.
Regards,
Madhu.T.K
There are many issues connected with such lesser contributions and many issues are before various courts also.The PF authorities claim that PF should be contributed at least on minimum wages. But at the same time they have no right to enforce minimum wages because under the Minimum Wages Act the enforcing authority is the State's Labour department. If both these departments join their hands there could be some definite answer to the question on what minimum amount should PF be contributed. Till then PF department have their own circular saying that PF shall be calculated at least on 70% of the total salary subject to a maximum of Rs 6500.
Regards,
Madhu.T.K