Confused About PF Calculations? Need Help with Special Allowance Inclusion

Dear Seniors, I am from Hyderabad and working as a manager in a pharmaceutical company. My Salary Structure is as follows: Basic - 12260, HRA - 7969, Bonus - 1021, TA - 800, Special Allowance - 12179, CCA - 0, Education Allowance - 0, Total - 35029. My Deductions: PF - 1471 (12% of Basic), PT - 200.

Clarification Needed on PF Calculations

In view of a notice received from an Enforcement Officer regarding the special allowance not being included for PF calculations, kindly clarify the following points, please:

1. Is the calculation of PF, i.e., 1471, which is 12% of Basic (12260), correct?
2. I understand that HRA, Bonus, and TA in the above breakup need not be included for PF calculations. Please correct me if I am wrong.
3. Should we include the special allowance, i.e., Rs. 12179, for the calculation of PF along with Basic?
4. With the above salary structure, are we going against the law? If yes, kindly point out where we are making mistakes in calculations.

Thank you.

1. Is the calculation of PF, i.e., 1471 (which is 12% on Basic - 12260), correct? Yes.

2. I understand that HRA, Bonus, and TA in the above breakup need not be included for PF calculations. Please correct me if I am wrong. Except for Basic and DA, no other allowances are required to be deducted for EPF contributions. There are several case laws available to substantiate this point. The same can be shown to EPF authorities for reference.

3. Should we include the special allowance, i.e., Rs. 12179, for the calculation of PF along with Basic? Not required unless the employee wants it to be included as a voluntary contribution.

4. With the above salary structure, are we going against the law? If yes, kindly point out where we are making mistakes in calculations. There is nothing against the law in the above structure as long as your employer is also paying their contribution of 13.65% of your basic, excluding your 12%.

Thank you, Mr. Stephen. That was indeed a clear reply. I confirm that ours is CTC, and both contributions are being paid as per the laws.

Secondly, it would be helpful for us if you could refer to the case laws you mentioned or at least guide us on how to check them on the internet or obtain them in book form. It would be of great help.

Thirdly, in the salary structure I provided earlier, instead of "Special Allowance," "Flexi Benefit Pay" was used, but the amount remains the same. Will this update change your response? Please let us know.

Thanking you once again for the help.