Is PF Deduction Required on VDA Points? Urgent Clarification Needed!

PF Deduction on VDA Points

Recently, PF authorities visited and asked us to pay PF on VDA points as well. Please confirm whether the PF will be deducted on VDA or not. The authorities did not accept the attachment provided.

URGENT, PLEASE CONFIRM.

Regards,
PBS KUMAR

Yes, EPF is applicable on Basic + DA.

Regards, Abbas.P.S

Dear Abbas ji, please check my query. I am asking whether Variable Dearness Allowance (VDA), which is related to the CPI number declared by the Labour Department every six months, is applicable to PF or not.

Regards,
PBS KUMAR

Yes, the DA in connection with the Consumer Price Index is applicable for PF contribution.

Regards,
Abbas.P.S

Yes, EPF contribution will be deducted from the Variable Dearness Allowance.

Regards,
Sachin Verma

Please supply any case law on whether VDA is applicable for PF.

Regards,
PBS KUMAR

Kindly go through Section 29(1) of the EPF Act 1952 (Chapter V).

Contributions

(1) The contributions payable by the employer under the Scheme shall be at the rate of ten percent of the basic wages, dearness allowance (including the cash value of any food concession), and retaining allowance (if any) payable to each employee to whom the Scheme applies. Provided that the above rate of contribution shall be twelve percent in respect of any establishment or class of establishments which the Central Government may specify in the Official Gazette from time to time under the first proviso to subsection (1) of Section 6 of the Act.

Regards,
Abbas. P.S

There cannot be any doubt about it, EPF on VDA is very much applicable for both employees' subscription and employers' contribution; of course, the overall ceiling will apply. This is because it is nothing but a part of DA only, though the formula is linked to CPI.

Yes, PF should be deducted on Basic + DA.

Generally, the term Basic Salary is inclusive of Actual Basic + Variable Dearness Allowance. The Minimum Wage declared by the Labour Department is also inclusive of Actual Basic + Variable Dearness Allowance.

It means, if the salary of a workman is the same as the minimum wage declared by the Government, then PF will be deducted on the total salary.

Dear HR friends,

Currently, the enforcement officers are providing instructions to recover PF for the total salary (up to Rs. 6500.00 PF ceiling), except for House Rent Allowance.

This is for your information.

Regards,
Alphonse