Good Evening, seniors, kindly guide me in the calculation of PF. Should we take special allowance and food allowance into consideration for PF calculation if his salary breakup is as follows:
Salary Breakup
- Basic: 4000
- Medical: 1250
- Conveyance: 800
- CCA: 600
- Food Allowance: 500
- Special Allowance: 850
His PF contribution is - Rs. 4000 x 12% = 480/- or 5350 x 12% = 642/-, which one is correct? I have heard that MP has declared we need to take Special Allowance also for PF calculation from now on, is it true?
Thanks & Regards,
Sheela
From India, Coimbatore
Acknowledge(0)
Amend(0)
5Salary Breakup
- Basic: 4000
- Medical: 1250
- Conveyance: 800
- CCA: 600
- Food Allowance: 500
- Special Allowance: 850
His PF contribution is - Rs. 4000 x 12% = 480/- or 5350 x 12% = 642/-, which one is correct? I have heard that MP has declared we need to take Special Allowance also for PF calculation from now on, is it true?
Thanks & Regards,
Sheela
From India, Coimbatore
Acknowledge(0)Amend(0)
According to me first one is right that is 480. bcoz pf is deducted on the basic of salary that is 4000 and it is not included special allowances and food expense as i know.
From India, Chandigarh
Acknowledge(0)Amend(0)
From India, Chandigarh
Acknowledge(0)Amend(0)
Thanku, but I have heard that Madhya Pradesh PF officer declared that from November we need to include Spl. All in Basic for PF calculation, is it true?
From India, Coimbatore
Acknowledge(0)Amend(0)
From India, Coimbatore
Acknowledge(0)Amend(0)
Basically PF deduct on Basic + Spl All (that is called as DA) as per the govt rules & regulation, so you discuss with your friend as well as your senior they will suggest the same. Chetan Chavan
From India, Pune
Acknowledge(0)Amend(0)
From India, Pune
Acknowledge(0)Amend(0)
No, In my company we calculate as Basic + D. A. (Special Allowance) X 12 % = P. F. Contibution by Employee Basic + D. A. (Special Allowance) X 13.61 % = P. F. Contibution by Employer
From India, Nasik
Acknowledge(0)Amend(0)
From India, Nasik
Acknowledge(0)Amend(0)
Clarification on PF Calculation and Allowances
Referring to your query, as per Sec. 2(b) of the EPF and MP Act, 1952, the term "wages" excludes:
• Cash value of any food concession.
• Cash payment by whatever name called, paid on account of a rise in the cost of living, HRA, OT, Bonus, etc.
• Any presents made by the employer.
From this context, to answer your query: You do not need to include the Food Allowance. Secondly, there is no clarity regarding the Special Allowance. You should clearly define the purpose for which this special allowance is paid. If defined and justifiable before PF Enforcement, it does not attract PF contribution. If not, it comes under the purview of Basic wages and attracts PF contribution since it is not defined.
To be precise: Wages for PF would be Basic + DA + VDA + any other allowance which is not defined.
Regards.
From India, Bangalore
Acknowledge(0)Amend(0)
Referring to your query, as per Sec. 2(b) of the EPF and MP Act, 1952, the term "wages" excludes:
• Cash value of any food concession.
• Cash payment by whatever name called, paid on account of a rise in the cost of living, HRA, OT, Bonus, etc.
• Any presents made by the employer.
From this context, to answer your query: You do not need to include the Food Allowance. Secondly, there is no clarity regarding the Special Allowance. You should clearly define the purpose for which this special allowance is paid. If defined and justifiable before PF Enforcement, it does not attract PF contribution. If not, it comes under the purview of Basic wages and attracts PF contribution since it is not defined.
To be precise: Wages for PF would be Basic + DA + VDA + any other allowance which is not defined.
Regards.
From India, Bangalore
Acknowledge(0)Amend(0)
Regarding your query, please refer to Sec 2(b) and also Sec 6 of the EPF & Miscellaneous Provisions Act of 1952. The contributions on PF should be calculated based on the Basic Salary and D.A or any other retaining allowance. Other allowances should not be considered as part of the wage for the purpose of contribution under the said act.
Regards,
V R RAO PULIPAKA
From India, Bangalore
Acknowledge(0)Amend(0)
Regards,
V R RAO PULIPAKA
From India, Bangalore
Acknowledge(0)Amend(0)
dear, As i know we have to take only the basic for PF calculation. 480/- is the correct calculation.
From India, Hyderabad
Acknowledge(0)Amend(0)
From India, Hyderabad
Acknowledge(0)Amend(0)
EPF Deduction Clarification
Basically, the deduction of EPF is done on basic salary + DA/VDA + food conc. (if any). As far as the special allowance is concerned, it will be treated as an undefined allowance according to the Payment of Wages Act. Terms like special allowance and other allowances are not included in the definition of the same. Therefore, the Commissionerate of Labour, EPF & various other departments consider those allowances as omitted wages, which should be treated at par with basic wages. Consequently, the contribution of EPF on the same will be justified.
While this may not have been the case all the time, during EPF inspections, such allowances will be considered for the deduction of EPF.
Thanks & regards,
Sumit Kumar Saxena
[Phone Number Removed For Privacy Reasons]
From India, Ghaziabad
Acknowledge(0)Amend(0)
Basically, the deduction of EPF is done on basic salary + DA/VDA + food conc. (if any). As far as the special allowance is concerned, it will be treated as an undefined allowance according to the Payment of Wages Act. Terms like special allowance and other allowances are not included in the definition of the same. Therefore, the Commissionerate of Labour, EPF & various other departments consider those allowances as omitted wages, which should be treated at par with basic wages. Consequently, the contribution of EPF on the same will be justified.
While this may not have been the case all the time, during EPF inspections, such allowances will be considered for the deduction of EPF.
Thanks & regards,
Sumit Kumar Saxena
[Phone Number Removed For Privacy Reasons]
From India, Ghaziabad
Acknowledge(0)Amend(0)
Adding to your comment, if the special allowances are specifically paid to defray the special expenditure incurred by an employee due to the nature of the work undertaken or assigned by the employer, it would not attract PF as it is not the usual allowance paid to all. However, some employers have the practice of avoiding PF contributions by keeping the Basic low. For this purpose, they term it as Special Allowance, Supplementary Allowance, etc.
From India, Bangalore
Acknowledge(0)Amend(0)
From India, Bangalore
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
PF Notification on special allowance.pdf