Understanding PF Calculations: Which Allowances Are Actually Exempt?

What allowances are exempted from PF calculation?

Only HRA is excluded from EPF contribution. However, if the HRA is significantly larger than the other components, the EPFO may request an explanation to determine whether it is paid to all employees or only to those residing in leased houses.

Other than HRA, if there is any component related to production or productivity, such as a production incentive or any specific payment with conditions and not paid across the board (e.g., night shift allowance), it will be paid only to employees for a specific period for night shift duty and will also be exempted from PF contribution.

Regards, S K Bandyopadhyay