Whether special allowance will attract PF if the pf is already being deducted in basic that is much higher that the minimum wage or Rs. 6500.00, which is defined in PF..
From India, Mumbai
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From India, Mumbai
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Normally, all allowances not specifically attributed to any specific thing (like House Rent Allowance, Travelling Allowance, etc.) and that are paid to all employees are considered part of wages for the purpose of PF contribution.
Inclusion and Exclusion in PF Contribution
The Apex Court, while giving a verdict in Bridges and Roofs (India) Ltd Vs. Union of India [1963 (2) LLJ 490], stated that "it seems that the basis of inclusion in Section 6 (of Employees Provident Fund and Miscellaneous Provisions Act, 1952) and exclusion in Clause (ii) is that whatever is payable in all concerns and is earned by all permanent employees is included for the purpose of contribution under Section 6, but whatever is not payable by all concerns or may not be earned by all employees of concern is excluded for the purposes of contribution." This means if a special allowance is paid to all employees, it will be treated as part of the PF qualifying salary. However, if it is paid to any particular employee or a section of employees doing work different from others, it will not be regarded as part of wages.
Ad Hoc Payments and PF Contribution
In Associated Cement Company Ltd. and Ors. v. R.M. Gandhi, Regional Provident Fund Commissioner, Gujarat (1995-III-LLJ(Suppl.)-368), it was held that ad hoc payments made to 'eligible employees and not to all employees' under an agreement do not form part of basic wages for PF contribution.
PF Contribution Limit
In any case, the PF authorities cannot ask the company to pay PF on any wages above Rs 6,500. In Marathwada Gramin Bank Karamchari Sanghatana and another Vs Management of Marathwada Gramin Bank and others (SC 2011 LLR 1130), the Supreme Court has stated that the company can restrict its contribution to Rs 6,500, and the EPFO has no right to direct the employer to remit PF on an amount over and above Rs 6,500.
Regards,
Madhu.T.K
From India, Kannur
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4526Inclusion and Exclusion in PF Contribution
The Apex Court, while giving a verdict in Bridges and Roofs (India) Ltd Vs. Union of India [1963 (2) LLJ 490], stated that "it seems that the basis of inclusion in Section 6 (of Employees Provident Fund and Miscellaneous Provisions Act, 1952) and exclusion in Clause (ii) is that whatever is payable in all concerns and is earned by all permanent employees is included for the purpose of contribution under Section 6, but whatever is not payable by all concerns or may not be earned by all employees of concern is excluded for the purposes of contribution." This means if a special allowance is paid to all employees, it will be treated as part of the PF qualifying salary. However, if it is paid to any particular employee or a section of employees doing work different from others, it will not be regarded as part of wages.
Ad Hoc Payments and PF Contribution
In Associated Cement Company Ltd. and Ors. v. R.M. Gandhi, Regional Provident Fund Commissioner, Gujarat (1995-III-LLJ(Suppl.)-368), it was held that ad hoc payments made to 'eligible employees and not to all employees' under an agreement do not form part of basic wages for PF contribution.
PF Contribution Limit
In any case, the PF authorities cannot ask the company to pay PF on any wages above Rs 6,500. In Marathwada Gramin Bank Karamchari Sanghatana and another Vs Management of Marathwada Gramin Bank and others (SC 2011 LLR 1130), the Supreme Court has stated that the company can restrict its contribution to Rs 6,500, and the EPFO has no right to direct the employer to remit PF on an amount over and above Rs 6,500.
Regards,
Madhu.T.K
From India, Kannur
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PF Notification on special allowance.pdf