Dear Ramniwas
The definition of pay under the Employees Provident Fund Scheme, 1952 means basic wages with dearness allowance, retaining allowance if any and cash value of food concession. In my view if we refer this definition the special allowance should not be treated as part of pay for applicability of PF. But if it establishes later on at the time of inspection that the employer had divert lion's share of pay in special allowance with malafide intention to curtail/escape the PF liability you will be in soup. I am also of the opinion in case the basic, DA and retaining allowance of the employees is more than Rs.6500/- and even then you are paying special allowance then no liability of PF on special allowance will be fastened on you as the employer can restrict the compliance up to the pay of Rs.6500/- p.m.
Rgds
VP Jain