Dear Experts,
In my company the following componets are part of salary,
Basic
HRA
Special Allowance
Book Allowance
Conveyance Allowance
Prof Development Allowance
Medical Reimbursement
Mobile Reimbursement
Car Allowance
Can i deduct pf on all component or only on basic
Please help me it is very
urgent and send the minumum wages circular
Regards
Mangesh Sante
From India, Pune
In my company the following componets are part of salary,
Basic
HRA
Special Allowance
Book Allowance
Conveyance Allowance
Prof Development Allowance
Medical Reimbursement
Mobile Reimbursement
Car Allowance
Can i deduct pf on all component or only on basic
Please help me it is very
urgent and send the minumum wages circular
Regards
Mangesh Sante
From India, Pune
In the absence of DA/VDA in your salary structure you can deduct P from the basic salary only. However, if the basic salary is so made as to reduce the company's liability towards PF, or if the basic salary alone is less than the gross minimum wages fixed by your state govt in respect of your industry, then you will have to take some other component also as there have been circulars from the PF and courts directing to contribute PF at least on minimum wages. Similarly, special allowance in your salary is also a component to be disputed. If the special allowance is common to all employees and not confined to some employees who are assigned any special task to do, then it will be treated as part of PF qualifying salary. However, if the basic salary itself is Rs 6500 or more, you can restrict the contribution to the required percentage on Rs 6500.
Regards,
Madhu.T.K
From India, Kannur
4249Regards,
Madhu.T.K
From India, Kannur
Thank You
But as per new circular the pf calculated on Basic+DA+Special Allowance+Conveyance+Education All +Book Allowance
can you send the circular regarding PF
From India, Pune
But as per new circular the pf calculated on Basic+DA+Special Allowance+Conveyance+Education All +Book Allowance
can you send the circular regarding PF
From India, Pune
Hi All,
I need to know if an employer is liable to pay PF (assuming the employee strength exceeds 20) in case the basic is Rs 16000 for an employee. What does the statute say on the payment of PF? Also, it would be great is someone can upload the statutory rule for PF
Rgds,
Saumya
From India, Madras
I need to know if an employer is liable to pay PF (assuming the employee strength exceeds 20) in case the basic is Rs 16000 for an employee. What does the statute say on the payment of PF? Also, it would be great is someone can upload the statutory rule for PF
Rgds,
Saumya
From India, Madras
As per statute you can restrict the PF contributions on Rs 6500 even if the single component ,ie, Basic salary, is more than that, ie, Rs 16000 in your example.
The case of special allowance is applicable only when the total qualifying salary is less than Rs 6500. The matter has been discussed in various verdicts on the matter.
Regards,
Madhu.T.K
From India, Kannur
The case of special allowance is applicable only when the total qualifying salary is less than Rs 6500. The matter has been discussed in various verdicts on the matter.
Regards,
Madhu.T.K
From India, Kannur
Dear Madhu Sir, Suppose the basic is Rs.2500/- special allowance Rs.1500/- ( Not DA)& total salary Rs.6550/- In such case we can consider the PF on which amount Regards Mangesh
From India, Pune
From India, Pune
In such cases it is advisable to include Special allowance also to fix the PF qualifying salary since the basic wage alone is much lower and it may not be accepted by the PF authorities. However, if you can prove that special allowance is paid to certain categories of employees only and is paid to some special skill hired, you can avoid it. But it is a matter to be debated that what kind of special resource is available in an employee whose basic wage is just Rs 2500. Above all, it is a time when a heated discussion is being taken place around the definition of wages as is given in the EPF Act and the authorities are trying their level best to enforce payment of contributions at least on minimum wages.
For your information let me also quote some court verdicts. The Madras High Court in R Ramanathan Chettiar Jewellers, Madurai vs. Regional PF Commissioner, Madurai – 1988 (ii) LLJ 045, has held that where the special allowance is not paid under contract of employment, settlement or award but paid purely out of management’s own will and pleasure then such special allowance would not be taken into account for the purpose of calculating contribution payable under the Act. This ruling lays stress that a payment which is not of a regular nature and is paid purely in the discretion of the management, would not be available for PF contribution.
In Associated Cement Company Ltd. and Ors. v. R.M. Gandhi, Regional Provident Fund Commissioner, Gujarat(1995-III-LLJ(Suppl.)-368), it has been held that ad hoc payments made to ‘eligible employees and not to all employees’ under agreement does not form part of basic wages for PF contribution.
The Apex Court while giving verdict in Bridges and Roofs (India) Ltd Vs. Union of India [1963 (2) LLJ 490], has said 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."
The above verdicts supports that if special allowance is paid as a special case to some employees, it will not form part of PF qualifying salary and at the same time, if it is common to all employees by virtue of an agreement with all employees or a settlement, then it will be deemed to be a part of salary on which PF is to be contributed.
Regards,
Madhu.T.K
From India, Kannur
For your information let me also quote some court verdicts. The Madras High Court in R Ramanathan Chettiar Jewellers, Madurai vs. Regional PF Commissioner, Madurai – 1988 (ii) LLJ 045, has held that where the special allowance is not paid under contract of employment, settlement or award but paid purely out of management’s own will and pleasure then such special allowance would not be taken into account for the purpose of calculating contribution payable under the Act. This ruling lays stress that a payment which is not of a regular nature and is paid purely in the discretion of the management, would not be available for PF contribution.
In Associated Cement Company Ltd. and Ors. v. R.M. Gandhi, Regional Provident Fund Commissioner, Gujarat(1995-III-LLJ(Suppl.)-368), it has been held that ad hoc payments made to ‘eligible employees and not to all employees’ under agreement does not form part of basic wages for PF contribution.
The Apex Court while giving verdict in Bridges and Roofs (India) Ltd Vs. Union of India [1963 (2) LLJ 490], has said 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."
The above verdicts supports that if special allowance is paid as a special case to some employees, it will not form part of PF qualifying salary and at the same time, if it is common to all employees by virtue of an agreement with all employees or a settlement, then it will be deemed to be a part of salary on which PF is to be contributed.
Regards,
Madhu.T.K
From India, Kannur
Dear Mr.Madhu ,
Can you please clarify as to whether ,subsistence allowance paid to a worker placed under suspension pending enquiry in to charges alleged against him is to be deemed as wages for the purpose of deduction of PF contribution.I had come across aan article by Mr.HLKumar in Labour Law Reporter some years back ,where in different types of payments ,which are/are not to be deemed as wages for the above purpose were cited.Since I have not the copy of that article with me right now,if you have that copy of LLR,kindly point out those items of payments for the benefit of members of the community.
With Regards,
S.K.Hota
From India, Calcutta
Can you please clarify as to whether ,subsistence allowance paid to a worker placed under suspension pending enquiry in to charges alleged against him is to be deemed as wages for the purpose of deduction of PF contribution.I had come across aan article by Mr.HLKumar in Labour Law Reporter some years back ,where in different types of payments ,which are/are not to be deemed as wages for the above purpose were cited.Since I have not the copy of that article with me right now,if you have that copy of LLR,kindly point out those items of payments for the benefit of members of the community.
With Regards,
S.K.Hota
From India, Calcutta
Since subsistence allowance is not earned by employment the same is not treated as wages for the purpose of contribution to EPF. However, a different view is expressed by the ESI Corporation in this matter and subsistence pay will attract ESI. To add, once the employee's suspension is revoked he will get entire amount as salary arrears and at that time, the PF can be deducted because arrears of salary will attract PF and that may be reason why subsistence allowance is not considered for deduction of PF.
Regards,
Madhu.T.K
From India, Kannur
Regards,
Madhu.T.K
From India, Kannur
Dear Mr.Madhu,
Many thanks.I fully agree with your contention.ESI contribution is deducted from subsistence allowance ,because employee-employer relation continues during suspension period and if the suspended employee meets any casualty or suffers from any serious desease outside employment,he cannot be able to get medical beneift from ESIC,if no contribution is paid during related contribution period.
With warm regards & wishing you & your family a very happy new year,
SKHota
From India, Calcutta
Many thanks.I fully agree with your contention.ESI contribution is deducted from subsistence allowance ,because employee-employer relation continues during suspension period and if the suspended employee meets any casualty or suffers from any serious desease outside employment,he cannot be able to get medical beneift from ESIC,if no contribution is paid during related contribution period.
With warm regards & wishing you & your family a very happy new year,
SKHota
From India, Calcutta
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