Understanding PF and ESI Deductions for Teachers on UGC Pay: What Should Be Considered?

Dear Professionals,

Scenario: A teacher is employed at a college, and the pay scale is as follows:
- UGC Pay: Rs. 30,000
- General DA (UGC): Rs. 17,400
- HRA (UGC): Rs. 3,000
- Medical Allowance (UGC): Rs. 300
- College Pay: Rs. 740
- College DA: Rs. 100
- Special Allowance: Rs. 5,000

Queries:
1. Is PF and ESI applicable to the employee since the UGC pay scale is much higher than the amount specified for the applicability of ESI and PF?
2. If applicable, on what amount does the college need to deduct ESI and PF, and at what rates?
3. What is the rate of deduction of PF on UGC pay?

Your early suggestions will be highly appreciated.

Regards,
BJ

ESI is not applicable in this case. Even though PF is also not statutory, it may be remitted with the consent of the employee and employer on either the ceiling salary or actual salary.

Regards,
Abbas.P.S

Thank you for your response. It would be helpful if you could provide clarification on the amount on which PF needs to be deducted. Specifically, I would like to know whether PF should be deducted on all components of the salary, i.e., UGC Pay + College Pay, or only on College Pay. If it is only on College Pay, please advise whether College DA and Special Allowance need to be included.

Regards,
BJ

Definition of Basic Wages

Please refer to my query, as defined in the act, basic wages means:

“Basic Wages” means all emoluments which are earned by an employee while on duty or on leave or on holidays 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:
- The cash value of any food concession;
- 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;
- Any presents made by the employer.

Considering the definition and various case laws as given in the attachment, DA and other allowances as defined in the act are specifically excluded from the definition.

Please share your views in this regard.

Regards,
BJ

In provision 6, it is clearly stated that the contribution is on "the basic wages, dearness allowance, and retaining allowance, if any." The attached file with your posting is not regarding contribution but basic wages. It is a fact that DA is not included in basic wages as stated in the above attachment because they are different components. However, for the contribution to EPF, both basic wages and DA will be taken into account.

Regards,
Abbas.P.S

I have a query regarding the PF. If an employee's salary exceeds Rs. 15,000 and they opt for a voluntary contribution, should PF be deducted and contributed up to Rs. 15,000 only or on the whole amount?

Regards,
BJ