Understanding EPF Contributions: Does Paying Wages by Cheque Affect It?

Dear Seniors, As per section 2(b), wages mean all emoluments earned by an employee while on duty, on leave, or on holiday with wages, in either case, in accordance with the terms of the contract of employment, which are paid or payable in cash to him but do not include: 1) the cash value of food concession. 2) Any dearness allowance, that is to say, all cash payments, by whatever name called, paid to an employee on account of the rise in living.

Query on Wages Definition and EPF Contribution

My query is: Does this wages definition state that if we pay wages by cheque or NEFT, then no EPF contributions will be attracted? Secondly, practically for EPF contribution, we consider Basic plus DA, but in this interpretation under section 2(b), is DA in this clause of "does not include"? Please clarify my doubt.

Regards, Mukesh Kumar

Payment by any means is subject to statutory compliance. It may be cash, cheque, RTGS, NEFT, or even credit for some time. The term "cash" is used for ease of calculation only.

The value of food, gifts, or clothing brought by the employer exclusively for the staff's use is not considered part of the salary. Instead, it is an expense on the employee, and these amounts cannot be included in the statutory compliance of contributions.

Dear sir,

The basic definition is correct as explained by Mr. Sharma. DA is separately added in PF wages.

Thanks,
Vidyadhar Bhat

Dear All,

In 2012, EPFO issued Circular No. 7(1)2012/Rcs, changing the definition of wages. Please clarify whether PF is to be calculated inclusive of the allowances as per the circular or on Basic plus DA as per Section 2(b).