All components which are specified by amounts shall qualify for EPF. Though House rent is not part of PF qualifying salary, the same paid universally to all the employees irrespective of whether they reside in their own houses or rented houses, shall be taken as part of salary and not as an allowance excluded from the PF. Incentives, commission etc being expressed in percentages and not in certain amounts shall, obviously, be outside the purview of PF.
If the total salary exceeds Rs 15000(as per present law) the amount which exceeds Rs 15000 may also be treated as salary which will not qualify for PF.
From India, Kannur
4240If the total salary exceeds Rs 15000(as per present law) the amount which exceeds Rs 15000 may also be treated as salary which will not qualify for PF.
From India, Kannur
Mr. Madhu
I think the judgement said all allowances are to be considered except HRA and no exemption or condition was put for HRA. For other allowances, condition that it may be excepted if not paid to all on a standard pattern, etc was provided. At least that is my understanding of the judgement. Are you saying that even HRA can be included in the same manner?
From India, Mumbai
I think the judgement said all allowances are to be considered except HRA and no exemption or condition was put for HRA. For other allowances, condition that it may be excepted if not paid to all on a standard pattern, etc was provided. At least that is my understanding of the judgement. Are you saying that even HRA can be included in the same manner?
From India, Mumbai
HRA per se is an allowance apart from the salary. It is payable to those who resides in a rented house and not to all. In a private company, the HRA is a part of salary. It is not paid if the employee is on leave without pay. Therefore, it has all the attributes of a salary. That is why i have said that HRA paid universally is part of Salary. Similar interpretation can be drawn in the case of gratuity qualifying salary also. Please go through my post in my blog in this regard.
Madhu T K: Payment of Gratuity and Gratuity Qualifying Salary
From India, Kannur
Madhu T K: Payment of Gratuity and Gratuity Qualifying Salary
From India, Kannur
My personal observations of the issue are as follows:-
1. The origin of the case was from the definition of Basic wages as per the present PF & Misc. Act. All the organizations all over India was paying contribution of PF on Basic & DA only though in the definition of Basic wages it is mentioned that it includes all remuneration with exclusion of HRA, DA etc. As per Sec -6 of the PF act contribution to be paid on Basic, DA & RA.
2. As per Apex court Verdict all organizations have been paying contribution on (Monthly gross - HRA).
3. To my opinion as the Apex court has not been rejected or amended the definition of Basic Wages, therefore, as per exclusion list of the definition, HRA is not being considered.
4. Moreover, in the new labor codes PF contribution will be on wages ( Basic & DA ) only.
5. I hope all the Indian organizations will pay PF contribution and Gratuity payment on Basic & DA only even after implementation of labor codes also.
S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
USD HR Solutions – To Strive towards excellence with effort and integrity
From India, New Delhi
1. The origin of the case was from the definition of Basic wages as per the present PF & Misc. Act. All the organizations all over India was paying contribution of PF on Basic & DA only though in the definition of Basic wages it is mentioned that it includes all remuneration with exclusion of HRA, DA etc. As per Sec -6 of the PF act contribution to be paid on Basic, DA & RA.
2. As per Apex court Verdict all organizations have been paying contribution on (Monthly gross - HRA).
3. To my opinion as the Apex court has not been rejected or amended the definition of Basic Wages, therefore, as per exclusion list of the definition, HRA is not being considered.
4. Moreover, in the new labor codes PF contribution will be on wages ( Basic & DA ) only.
5. I hope all the Indian organizations will pay PF contribution and Gratuity payment on Basic & DA only even after implementation of labor codes also.
S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
USD HR Solutions – To Strive towards excellence with effort and integrity
From India, New Delhi
Mr. Bandyopadhyay,
I agree with you.
The SC did not change the definition. It clarified what was meant by 'All other Allowances'.
Therefore, the exclusion of HRA stands.
With ref. to new Labour Codes, the definition of Basic has changed. The practice of putting basic at 10% or 15% of total gross is now not allowed, which is where the entire problem for the SC judgement started. The manipulation was not in line with the intent of the legislation. I think after the Labour Code is put into effect, the definition will be adopted.
From India, Mumbai
I agree with you.
The SC did not change the definition. It clarified what was meant by 'All other Allowances'.
Therefore, the exclusion of HRA stands.
With ref. to new Labour Codes, the definition of Basic has changed. The practice of putting basic at 10% or 15% of total gross is now not allowed, which is where the entire problem for the SC judgement started. The manipulation was not in line with the intent of the legislation. I think after the Labour Code is put into effect, the definition will be adopted.
From India, Mumbai
The definition of wages under the existing EPF & MP Act is very clear. It defines basic wages as total remuneration as per agreement. It excludes HRA and DA. Now coming to the contribution payable, the Act says that it is payable on the basic wages and DA. HRA is part of salary for all the private establishments. It is not paid separately but it comes along with salary. When an employer pays house rent allowance, as an allowance, he pays it either as a reimbursement or by means of a payment direct to the landlord. It is not paid to an employee who is residing in his own house. It is paid only to such employees with whom a commitment exists as per the contract of agreement. When such payment is made no deduction is made pro rata if during that month the employee had remained leave without pay. But in general HRA is proportionately deducted when an employee takes Leave without pay. Moreover, as per Roofs and Bridges case, an allowance paid universally to all employees should be part of basic wages.
From India, Kannur
From India, Kannur
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.
Statutory Calculation(EPF ).doc
EPF PENSION CALCULATION.zip
EPF Damages Calculation.xls