Understanding PF Deductions: Is Special Allowance Included in Your Salary?

Dear All,

PF is deducted on which components of salary? A labor consultant was suggesting that PF is also deducted on Special Allowance. Could you all send me your views on the same, please?

Rgds

Dear Vinod ,
PF is deducted on Basic pay. Below is the definition of Basic Pay.
‘Basic pay' :- means all emoluments which are earned by an employee while on
duty or on leave or on holiday with wages in either case in accordance with the terms of
the contract of employment and which are paid or payable in cash to him but does not
include -
(i) the cash of any food concession
(ii) any dearness allowance (that is to say, all cash payments by whatever
name called paid to an employee on account of a rise in the cost of
living), house rent allowance, overtime allowance, bonus, commission
or any other similar allowance, payable to the employee in respect of
his employment or of work done in such employment.
(iii) any presents made by the employer.
Source
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Regards
Krishna

Nowadays, the consultants (with due respect) just aim to make money by suggesting various things that are outside the scope of acts and rules. Of course, there are some court judgments stating that special allowances also need to be included in basic wages for the purpose of PF contribution. In my view, unless the EPF Act is amended to the effect that nothing other than Basic and DA (as per the contract of employment) needs to be considered. There are various organizations challenging these aspects, which are pending before EPF tribunal and courts.

GK

Dear Friend,

P.F. is deducted on BASIC + D.A. + the cash value of any food concession.

Regards,
S. Achuthananda

Dear Friends,

I wanted confirmation on whether my calculation of the attrition rate is correct. The formula used is as follows:

(Number of employees who left during the year / Number of employees at the beginning of the year + the new recruits of the year) * 100.

Kindly shed some light on whether the calculation is accurate.

Regards,
Celine

Dear Friends,

Please note that PF deduction is applicable on 3 entities:
1. Basic Wages
2. DA
3. Leave Encashment. (Effective from 1st May 2005)

Regards,
Bhavesh B. Agrawal