Confused About EPF Deductions on Allowances? Seeking Clarity on Employer's Share!

The order dated 28/02/2019 issued by the Honorable Supreme Court on Civil Appeal No. 6221 of 2011 filed by RPFC regarding P.F. deduction on allowances along with the basic wages states that allowances are an essential part of the basic wages. If I pay my employee Rs. 16,000.00 per month, then what will be his EPF salary - Rs. 15,000.00 or Rs. 16,000.00? If it's Rs. 16,000.00, then what will be the employer's share - on Rs. 15,000.00 or on Rs. 16,000.00? Experts, please advise on this matter.

The salary ceiling for coverage under the EPF Act, 1952 is Rs. 15,000.00 per month only. When an existing member/employee's monthly salary exceeds this limit, the contribution will be restricted to Rs. 15,000.00 only. If desired, the employee can choose to contribute more, while the employer's contribution will be based on the ceiling amount only.

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The Supreme Court judgment will translate to a higher deduction for PF, which is good in terms of building the nest egg, but not so much for anyone's current lifestyle since it means a lower take-home salary. Not everyone will be impacted by this development. I think the order will be applicable to those with a basic salary and allowances up to Rs 15,000 as PF contribution.

Thanks for the reply.