X Ltd. provides salary under three broad heads: a) Basic Salary, b) HRA, and c) Special Allowance. The question is whether PF is liable to be deducted on the Special Allowance.
a) If the answer is yes, why is it deductible?
b) Do we have any case law on the subject matter to support the case?
I am looking forward purely from the Legal Perspective as per the definition in the PF Act.
Vineet Agarwal
vineet.agarwal@spil.co.in
From India, New Delhi
Acknowledge(1)
Amend(0)
1a) If the answer is yes, why is it deductible?
b) Do we have any case law on the subject matter to support the case?
I am looking forward purely from the Legal Perspective as per the definition in the PF Act.
Vineet Agarwal
vineet.agarwal@spil.co.in
From India, New Delhi
Acknowledge(1)Amend(0)
Dear Vineet,
PF authorities object to special allowance because this allowance is not clearly defined. If you had specified it clearly, such as conveyance allowance or medical allowance, they would not have objected. For special allowance, they require PF contribution.
Thanks,
J.S. Malik
From India, Delhi
Acknowledge(0)Amend(0)
PF authorities object to special allowance because this allowance is not clearly defined. If you had specified it clearly, such as conveyance allowance or medical allowance, they would not have objected. For special allowance, they require PF contribution.
Thanks,
J.S. Malik
From India, Delhi
Acknowledge(0)Amend(0)
I beg to differ from the views expressed. I am exploring purely from the legal, i.e., judgments of the court as well as the definition of the Basic Wages as defined in the EPF Act.
We have to understand the definition of 2-b of the EPF Act as well as judgments pronounced by the Honorable Supreme Court of India in the case of Manipal Academy Vs. PF Commissioner, Bridge and Road Co. Case, and other leading judgments in the case. If you see the definition of Basic wages is provided means all emoluments... but does not include certain items as stipulated in clauses i), ii), and iii. The actual bone of contention is Clause ii. PF is to be deductible on special allowance as it falls in the ambit of the 2b of EPF Act.
From India, New Delhi
Acknowledge(0)Amend(0)
We have to understand the definition of 2-b of the EPF Act as well as judgments pronounced by the Honorable Supreme Court of India in the case of Manipal Academy Vs. PF Commissioner, Bridge and Road Co. Case, and other leading judgments in the case. If you see the definition of Basic wages is provided means all emoluments... but does not include certain items as stipulated in clauses i), ii), and iii. The actual bone of contention is Clause ii. PF is to be deductible on special allowance as it falls in the ambit of the 2b of EPF Act.
From India, New Delhi
Acknowledge(0)Amend(0)
Spl allowance is considered as wages for the purpose of PF, but it is subject to a total amount of Rs. 6500/-. If your basic salary + DA and special allowance amount to more than Rs. 6500/-, the additional amount exceeding Rs. 6500/= is not required to be considered for PF contribution by the employer.
Ak Malhotra
Senior General Manager
Dharampal Satya Pal Limited
From India, Guwahati
Acknowledge(0)Amend(0)
Ak Malhotra
Senior General Manager
Dharampal Satya Pal Limited
From India, Guwahati
Acknowledge(0)Amend(0)
Mr. Malhotra, I agree with your words. The actual question lies in whether X Ltd is deducting PF on the complete basic amount irrespective of the limitation of Rs. 6500/- for PF deduction. What are the ways out so that the emoluments do not come under the ambit of the definition of wages as stipulated in section 2b of the PF Act? Your kind views are highly appreciated.
Vineet Agarwal
Vineet.agarwal@spil.co.in
From India, New Delhi
Acknowledge(0)Amend(0)
Vineet Agarwal
Vineet.agarwal@spil.co.in
From India, New Delhi
Acknowledge(0)Amend(0)
i want eject meaning, if basic+da+spl allowance is equal than 6500 then employer need to deduct on spl. allowance
From India, Hyderabad
Acknowledge(0)Amend(0)
From India, Hyderabad
Acknowledge(0)Amend(0)
i want eject meaning, if basic+da+spl allowance is equal than 6500 then employer need to deduct epf on spl. allowance
From India, Hyderabad
Acknowledge(0)Amend(0)
From India, Hyderabad
Acknowledge(0)Amend(0)
Special allowance has often been disputed throughout various cases in different contexts. The act does not provide for remittances or deductions on the special allowance. It is merely a tool for the enforcement machinery to impose provisions based on their personal understandings.
I also agree with Vineet's findings. For example, an establishment could pay a basic salary of 1000/- and a special allowance of 4000/-. Such scenarios create conflicts; however, deserving cases must be handled in accordance with the Principal Act of 1952 and not solely based on the judgments of a single judge in a high court.
Each legal matter has different perspectives and merits. This is all I can comment on based on the brief description of the case.
Thanks and regards,
Prasiddh
9765664475
From India, Pune
Acknowledge(0)Amend(0)
I also agree with Vineet's findings. For example, an establishment could pay a basic salary of 1000/- and a special allowance of 4000/-. Such scenarios create conflicts; however, deserving cases must be handled in accordance with the Principal Act of 1952 and not solely based on the judgments of a single judge in a high court.
Each legal matter has different perspectives and merits. This is all I can comment on based on the brief description of the case.
Thanks and regards,
Prasiddh
9765664475
From India, Pune
Acknowledge(0)Amend(0)
It is advisable to bifurcate the PF amount from Special Allowance, as this helps the employee in Tax Saving, as PF does not count to Tax. So its good to deduct PF from Special Allowance.
From India, Delhi
Acknowledge(0)Amend(0)
From India, Delhi
Acknowledge(0)Amend(0)
Tax implications are same as Basic Salary and Special allowance both are subject to the tax. Legally PF is also deductible on Special Allowance. Regards vineet
From India, New Delhi
Acknowledge(0)Amend(0)
From India, New Delhi
Acknowledge(0)Amend(0)
Dear Mr. Malhotra, And if the situation is in the absence of DA then would sp allow. be eligible for PF deductions. Pls help me out with this.
From India, Kolkata
Acknowledge(0)Amend(0)
From India, Kolkata
Acknowledge(0)Amend(0)
Our company had calculated HRA at 40% and paid the PF accordingly. Now, the PF office is asking to reschedule the payment structure to HRA 20%, and for the remaining 20%, pay PF. To avoid this, could you please suggest any allowance to skip PF?
From India, Pondicherry
Acknowledge(0)Amend(0)
From India, Pondicherry
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 Calculation Sheet To The Subscribers At the Time Of Provident Fund Withdrawal.pdf
PF-Know Employees Provident Fund-CHART-L-4. doc