Statutory compliance - add all components in HRA and Basic as per norms?

rajesh-rana1
Dear All, Can you help me ? I want to know according to SC in the salary breakup HRA and basic is important, means we can add all components in HRA and Basic as per norms. Is it correct or not.
loginmiraclelogistics
Hi Rana,
Any restructuring the components of emoluments with a view to reduce EPF contribution by employer is illegal. This is existing even before the pronouncement of SC judgment in the 'Special Allowance' case. Moreover quantum of every component and its reasonability is subject to review by govt.agencies associated with enforcing labour legislations such as EPF, ESI/EPS etc. Abnormal clubbing of many allw.in HRA as suggested also subject to scrutiny.
compliancefirst
HI ,
Please find the clarity as under -
1. There are mandatory components as per the state specific rules, There are some states like Maharashtra HRA can be paid between minimum 5% to Maximum up to 50% of the basic, but not more than that Statutory bonus is also mandatory for those whose wages are less than 21,000/- So as to avoid the additional PF burden you can not plainly add all the components in to excluded components every component is to be audited with reference to the applicable laws and statutory limitations.
Crux and key pointers here are as under -
1. PF ceiling of 15,000/-pm is same ,it has not been revised.
2. If minimum PF contribution as per ceiling is paid i.e 1800/- PM from Both Employee And Employer then there is no need to change.
3. IF contribution is less than 1800 and if Gross is more or up to 15,000/- Rs pm , where Basic is less than 15,000 and remaining amount is bifurcated among different heads then excluding HRA And Statutory Bonus, all other heads to be considered with Basic for framing PF wages up to 15,000/- or on total of all heads if total of all heads is less than 15,000/- then on that entire total amount as arrived to considered as wage for PF to be calculated on.
4. There is no new provision but it is interpretation to the existing section/ Term. Hence date of implication is not expected it is ongoing rule.
5. PF authority may have recourse to the verdict of SC while conducting the inspections and computation of liability up to wage ceiling as defined under the law
Regards,
Adv.Amruta M
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sathish1
I work for a private company in the HR department, so I want to know basic pf, statutory​ compliance.
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