Navigating PF Calculations: How Do You Handle Allowances in Revised Statements?

Dear Seniors,

I am working as an HR Executive. We are deducting only the basic + DA for PF. However, the Enforcement Officer conducts the verification and submits the report to the PF office. During this process, they calculate which other allowances given to the employee come under PF calculation.

Currently, we have paid the remaining amount. I need guidance on how to prepare the revised statement for the other allowances. Please advise me.

Regards,
Bagyaraj

From your post, I understand that the EPF Enforcement Officer directed you to pay contributions on the other parts of salary as well, and accordingly, you have paid the same. It is also understood that earlier, you had been contributing on a salary which was less than the minimum wages fixed by the government. If not, the observation of the EPF is not legal, and you can challenge it because, as per the Employees Provident Fund and Misc. Provisions Act, you are bound to pay contributions on the basic salary and DA only.

Regarding revising the returns (12 A), you can send a revised return with a remark on the top "Revised Return" showing the details of contributions on the actuals by combining the amounts paid earlier and the sum paid now.

Regards,
Madhu.T.K

Hi Everyone,

The issue is not as simple as the replies suggest. Legally, it is true that basic and DA are the components for the PF calculations. There are other relevant items for this purpose. Therefore, their nature and nomenclature have to be considered. It is not possible to name any sum differently than Basic and DA.

Every penny paid for work done during the course of employment qualifies for PF deduction. Unless other allowances and their nature are explained, it cannot be confined to only Basic + DA.

What are the EO's comments/observations? Is there anything recorded, or is it simply a bullying tactic?

An Ex RPFC Gr. I (Delhi)

Dear Bagyaraj,

Unless and until you define the nature of the allowance instead of casually saying "other allowances," the same shall be considered as basic wages. Therefore, it is essential to title the allowance in a way that elucidates its nature. This clarification is crucial as it distinguishes the allowance from basic wages, making it exempt from PF contributions.

Recently, the Honorable High Court (Haryana, Punjab) decided that even allowances bifurcated within the minimum wage structure cannot be considered for PF contributions.

Regards,
KIRAN KALE