Understanding PF Contributions: What Recent Court Judgments Mean for Your HRA and More

Please find attached a newspaper clipping of today's Hindustan Times on PF Contribution on HRA, Conv., etc., for your information.

Please also find copies of recent judgments of High Courts at MP and Madras.

Thanks & Regards,
Keshav Korgaonkar
Welcome To Shantadurga Enterprises
Cell: [Phone Number Removed For Privacy Reasons]

Splitting of Minimum Wages for Provident Fund Contributions

It may be recollected that in Assistant Provident Fund Commissioner, Gurgaon Vs. G4S Security Services (India) Limited & Anr, 2011 LLR 316, the Punjab & Haryana High Court has held that the provident fund contributions are not necessarily to be paid on the wages which are fixed under the Minimum Wages Act.

Being aggrieved, the EPFO filed a Letters Patent Appeal No. 1139 of 2011 before the Division Bench challenging the order of the learned Single Judge. The Division Bench, comprising of the Hon'ble Chief Justice Adarsh Kumar and the Hon'ble Justice A.K. Mittal, on 20.07.2011 dismissed the appeal.

EPFO to Seek Legal View on Nationwide Implementation of HC Order Not Allowing Splitting of Wages for Calculation of PF
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Retirement fund manager EPFO will seek legal opinion on the implementation of the order of the MP High Court throughout the country, under which employers and employees will be required to increase their contributions to the provident fund. “We will seek legal opinion and also the opinion of the Ministry of Law and Justice, through the Labour Ministry, on the MP High Court order throughout the country,” Central Provident Fund Commissioner Samirendra Chatterjee said.

The Madhya Pradesh (MP) High Court, in its recent order, stated that regular allowances like conveyance, entertainment, and medical should be included in the salary while computing the 12 percent contribution to the provident fund.

At present, the provident fund contribution, which is mandatory for all employees, forms 12 percent of the basic pay. The employer is also required to contribute a matching amount.

The court order would be implemented by the Employees' Provident Fund Organisation (EPFO) in Madhya Pradesh, Chatterjee said, adding that the decision on extending it across the country would be taken after seeking legal opinion.

The implementation of the order will put extra burden on employers and reduce the take-home salary of employees, as both will be required to enhance their contribution to the retirement fund.

On the positive side, the decision will significantly enhance the corpus of the EPFO, which has recently appointed four fund managers to manage its Rs 3.5 lakh crore, and enhance better returns at the time of retirement for its 4.72 crore subscribers.

It means we do not need to follow the MP High Court order until the legal view of the Ministry of Law and Justice is obtained.

Wait and watch the game.

Regards,
Amit

Thank you for sharing the important information. However, there is one thing I would like clarified. To the best of my knowledge, the EPF liability extends only up to a salary of Rs. 6,500 per month. For individuals earning a salary higher than Rs. 6,500 per month, PF contributions are to be made based only on Rs. 6,500. Could you please confirm if this is still the case or if there have been any recent changes?

Thank you,
Pradeep Srivastava
Naraingarh Sugar Mills Ltd.

Please help me with respect to the ceiling limit of Rs. 6500 regarding the employer's contribution.

Regards,
Swapnil

Can someone share the decision of the division bench of the Chennai High Court on this thread?

Hi all, The Hon'ble High Court of Karnataka, the High Court of Punjab & Haryana, and the High Court of MP have given their judgments. The EPFO filed an LPA challenging the judgment of the single judge, which has been dismissed by the Division Bench of the Punjab & Haryana High Court.

EPFO Implementation Query

Is it possible for the EPFO to implement the order of the MP High Court only in the state of MP and compel the employer and employee to contribute 12% of wages to EPF?

In case of RPFC:
PF is fully tax-free, and you can get it any time from RPFC. However, there is a limit for the Pension fund. If an employee resigns before completing six months, the pension fund will lapse (in case of withdrawal), but he/she can transfer the same to his/her new company's PF account.

In case of Trust:
If a company has its own trust, they deduct 10% income tax on the PF part (in case of withdrawal). To avoid this, you will have to complete a minimum of five years of service. A better option is to transfer the PF to the current organization.

Regards,

Dear All,

EPFO's Selective Decision Uploads

EPFO has always uploaded the decisions that come in its favor, whereas it never uploads the decisions that go against them.

Case of Splitting Minimum Wages

On the splitting of Minimum Wages, EPFO filed a Letters Patent Appeal No. 1139 of 2011 before the Division Bench challenging the order of the learned Single Judge. The Division Bench, comprising the Hon'ble Chief Justice Adarsh Kumar and the Hon'ble Justice A.K. Mittal, on 20.07.2011, dismissed the appeal. However, to this day, EPFO has not uploaded the decision on its website.

Issues with EPFO's Service Level

By issuing various circulars, EPFO just wants to divert the matter of service level to the members of the Provident Fund. The Provident Fund department has become an adda of dacoits. The members are facing many problems, from submitting forms to getting the provident fund withdrawal.

In Noida SRO, the persons sitting at the receipt counter demand money even to accept withdrawal forms and new code allotment applications.

We request Central Provident Fund Commissioner Samirendra Chatterjee to look into the matter personally and try to improve the service level at various offices of EPFO.

Regards,
Sanjeev Bhatia