Dear Member,
I would like to clarify the points regarding PF Contribution.
Minimum wages prescribe Basic + DA + Extra Allowance + Special Allowance (in case of certain categories of staff).
PF contribution is calculated at 12% of Basic + DA.
PF authorities insist that Basic + DA + Extra Allowance + Special Allowance have to be taken into account for calculating the PF contribution.
The PF act defines wages as all emoluments earned by an employee while on duty, on leave, or on holidays with wages, in accordance with the terms of the contract of employment and paid or payable in cash to him. It does not include:
(i) the cash value of any food concession;
(ii) any dearness allowance, which includes all cash payments by whatever name called paid to an employee on account of a rise in the cost of living, house-rent allowance, overtime allowance, bonus, commission, or any other similar allowance payable to the employee in respect of his employment or work done in such employment;
(iii) any presents made by the employer.
My question is: Is it mandatory that Extra/Special Allowance be taken into account for PF contribution?
Can anyone please brief me on this?
Would greatly appreciate your feedback.
Thank You,
Aldrin X. Panakal
From India, Cochin
Acknowledge(0)
Amend(0)
I would like to clarify the points regarding PF Contribution.
Minimum wages prescribe Basic + DA + Extra Allowance + Special Allowance (in case of certain categories of staff).
PF contribution is calculated at 12% of Basic + DA.
PF authorities insist that Basic + DA + Extra Allowance + Special Allowance have to be taken into account for calculating the PF contribution.
The PF act defines wages as all emoluments earned by an employee while on duty, on leave, or on holidays with wages, in accordance with the terms of the contract of employment and paid or payable in cash to him. It does not include:
(i) the cash value of any food concession;
(ii) any dearness allowance, which includes all cash payments by whatever name called paid to an employee on account of a rise in the cost of living, house-rent allowance, overtime allowance, bonus, commission, or any other similar allowance payable to the employee in respect of his employment or work done in such employment;
(iii) any presents made by the employer.
My question is: Is it mandatory that Extra/Special Allowance be taken into account for PF contribution?
Can anyone please brief me on this?
Would greatly appreciate your feedback.
Thank You,
Aldrin X. Panakal
From India, Cochin
Acknowledge(0)Amend(0)
Dear Aldrin X Panakal,
If a person is earning more than Rs. 15,000 and has a proper breakdown, then you can deduct for amounts less than Rs. 15,000. Normally, minimum wages consist of Basic and Variable DA only, not other components. If you pay any amount to the employee and make the PF deduction equal to the minimum wages, then no one can question you about the lower payment.
If you provide a conveyance allowance, follow the practice of the TVS Group. They used to collect backup data (tickets/monthly pass/season tickets) from employees and reimburse the conveyance allowance accordingly. Later, the management decided to rationalize the conveyance allowance based on the distance of the accommodation and fixed the amount for employees. When this was challenged in the Madras High Court by the ESI authorities, the court ruled in favor of TVS Group due to their proper records and the rationale for rationalizing the conveyance allowance.
If you pay the House Rent Allowance (HRA), ensure to obtain the rent receipt from the landlord and maintain a record of it. This way, you do not need to pay PF or income tax for it.
I hope your doubts are clarified. If you have any other queries, feel free to ask, and our members will assist you in resolving them.
From India, Kumbakonam
Acknowledge(0)Amend(0)
1189If a person is earning more than Rs. 15,000 and has a proper breakdown, then you can deduct for amounts less than Rs. 15,000. Normally, minimum wages consist of Basic and Variable DA only, not other components. If you pay any amount to the employee and make the PF deduction equal to the minimum wages, then no one can question you about the lower payment.
If you provide a conveyance allowance, follow the practice of the TVS Group. They used to collect backup data (tickets/monthly pass/season tickets) from employees and reimburse the conveyance allowance accordingly. Later, the management decided to rationalize the conveyance allowance based on the distance of the accommodation and fixed the amount for employees. When this was challenged in the Madras High Court by the ESI authorities, the court ruled in favor of TVS Group due to their proper records and the rationale for rationalizing the conveyance allowance.
If you pay the House Rent Allowance (HRA), ensure to obtain the rent receipt from the landlord and maintain a record of it. This way, you do not need to pay PF or income tax for it.
I hope your doubts are clarified. If you have any other queries, feel free to ask, and our members will assist you in resolving them.
From India, Kumbakonam
Acknowledge(0)Amend(0)
Dear,
As far as concerns special allowances and other allowances, they are still yet to be merged into the calculation of 12% of PF. It is under discussion. Hence, right now, only Basic and DA are under that area of 12% for PF calculation.
Dear Member,
I would like to clarify the points regarding PF Contribution. Minimum wages prescribe Basic + DA + Extra Allowance + Special Allowance (In case of certain categories of staff). PF contribution is calculated at 12% of Basic + DA. PF authorities insist that Basic + DA + Extra Allowance + Special Allowance have to be taken into account for calculating the PF contribution.
The PF act defines wages as all emoluments earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him. However, it does not include:
(i) the cash value of any food concession;
(ii) any dearness allowance, i.e., all cash payments by whatever name called, paid to an employee on account of a rise in the cost of living, house-rent allowance, overtime allowance, bonus, commission, or any other similar allowance payable to the employee in respect of his employment or work done in such employment;
(iii) any presents made by the employer.
My question is: Is it mandatory that Extra/Special Allowance be taken into account for PF contribution? Can anyone please brief me on this? Would greatly appreciate your feedback.
Thank You,
Aldrin X. Panakal
From India, Mumbai
Acknowledge(0)Amend(0)
As far as concerns special allowances and other allowances, they are still yet to be merged into the calculation of 12% of PF. It is under discussion. Hence, right now, only Basic and DA are under that area of 12% for PF calculation.
Dear Member,
I would like to clarify the points regarding PF Contribution. Minimum wages prescribe Basic + DA + Extra Allowance + Special Allowance (In case of certain categories of staff). PF contribution is calculated at 12% of Basic + DA. PF authorities insist that Basic + DA + Extra Allowance + Special Allowance have to be taken into account for calculating the PF contribution.
The PF act defines wages as all emoluments earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him. However, it does not include:
(i) the cash value of any food concession;
(ii) any dearness allowance, i.e., all cash payments by whatever name called, paid to an employee on account of a rise in the cost of living, house-rent allowance, overtime allowance, bonus, commission, or any other similar allowance payable to the employee in respect of his employment or work done in such employment;
(iii) any presents made by the employer.
My question is: Is it mandatory that Extra/Special Allowance be taken into account for PF contribution? Can anyone please brief me on this? Would greatly appreciate your feedback.
Thank You,
Aldrin X. Panakal
From India, Mumbai
Acknowledge(0)Amend(0)
Dear all,
Greetings of the day! I am working in an organization with almost 30 employees, and we also have a PF deduction scheme. However, to date, they have not shared the PF account number with us. Whenever we ask, they inform us that it is in process. Could you please advise on how long it actually takes for a PF account to be opened?
Regards,
Gsya
From India, New Delhi
Acknowledge(0)Amend(0)
Greetings of the day! I am working in an organization with almost 30 employees, and we also have a PF deduction scheme. However, to date, they have not shared the PF account number with us. Whenever we ask, they inform us that it is in process. Could you please advise on how long it actually takes for a PF account to be opened?
Regards,
Gsya
From India, New Delhi
Acknowledge(0)Amend(0)
Dear,
Please help me to calculate the salary. We work from 9:00 AM to 7:00 PM for 6 days in a week with one hour of break time every day. If an employee is late more than 10 minutes, they should work an additional 1 hour or 3 days late in a month will result in half-day salary deduction. There is a weekly off, but if they do not finish their tasks, they are required to work more to complete their work. However, the salary is for 9 hours only.
From India, Mumbai
Acknowledge(0)Amend(0)
Please help me to calculate the salary. We work from 9:00 AM to 7:00 PM for 6 days in a week with one hour of break time every day. If an employee is late more than 10 minutes, they should work an additional 1 hour or 3 days late in a month will result in half-day salary deduction. There is a weekly off, but if they do not finish their tasks, they are required to work more to complete their work. However, the salary is for 9 hours only.
From India, Mumbai
Acknowledge(0)Amend(0)Looking for something specific? - Join & Be Part Of Our Community and get connected with the right people who can help. Our AI-powered platform provides real-time fact-checking, peer-reviewed insights, and a vast historical knowledge base to support your search.
Employee Benefits.doc
PF Contribution on Leave Encashment - Clarification by EPFO.pdf