According to the definations under EPF Act
Pay includes basic wages with dearness allowance, retaining allowance (if any) and cash value of food concession admissible thereon.
That means in case an allowance in the form of cash is paid to an employee in his monthly salary as food allowance (ie) it can be even tea allowance that is paid along with the salary, the cash value of food amount paid is taken for the purpose of EPF contribution. Kindly read the defination part of EPF Act for further details.
From India, Madras
2Pay includes basic wages with dearness allowance, retaining allowance (if any) and cash value of food concession admissible thereon.
That means in case an allowance in the form of cash is paid to an employee in his monthly salary as food allowance (ie) it can be even tea allowance that is paid along with the salary, the cash value of food amount paid is taken for the purpose of EPF contribution. Kindly read the defination part of EPF Act for further details.
From India, Madras
Dear SC,
I think it is for only definition of "Basic wages".
However contritbution is recoverable on Basic wages, DA (Including the cash value of any food concession and retaining allowance if any), actually drawn during the whole month whether paid on daily, weekly, fortnightly, monthly basis.
Pls refer: Section 29 (3) of epf scheme 1952
For further more details pl. refer epfindia.com employer/contribution
Regards
I think it is for only definition of "Basic wages".
However contritbution is recoverable on Basic wages, DA (Including the cash value of any food concession and retaining allowance if any), actually drawn during the whole month whether paid on daily, weekly, fortnightly, monthly basis.
Pls refer: Section 29 (3) of epf scheme 1952
For further more details pl. refer epfindia.com employer/contribution
Regards
Employees Provident Fund Scheme , 1952
Chapter: Contributions
Section 29: Contribution
(1) The contributions payable by the employer under the scheme shall be at the rate of ten per cent of the basic wages, dearness allowance (including the cash value of any food concessions ) and retaining allowance (if any) payable to each employee to whom the Scheme applies :
Provided that the above rate of contribution shall be twelve per cent in respect of any establishment or class of establishment which the Central Government may specify in the Official Gazette from time to time under the first proviso to sub-section (1) of Section 6 of the act.
Thus DA & Food Concession cannot be included in basic but food Allowance is not food Concession. Concession with respect to accounts of the mess & canteen if any is food concession.
Generally (Basic+DA+RA+FC) should be about 60% of the gross amount payable
Chapter: Contributions
Section 29: Contribution
(1) The contributions payable by the employer under the scheme shall be at the rate of ten per cent of the basic wages, dearness allowance (including the cash value of any food concessions ) and retaining allowance (if any) payable to each employee to whom the Scheme applies :
Provided that the above rate of contribution shall be twelve per cent in respect of any establishment or class of establishment which the Central Government may specify in the Official Gazette from time to time under the first proviso to sub-section (1) of Section 6 of the act.
Thus DA & Food Concession cannot be included in basic but food Allowance is not food Concession. Concession with respect to accounts of the mess & canteen if any is food concession.
Generally (Basic+DA+RA+FC) should be about 60% of the gross amount payable
Dear Aby_Vas,
Is there any caselaw or anything to quote so as to establish that 'food allowance' cannot be defined as 'cash value of food concession' and therfore would not attract PF contribution?
Regards,
Govardhan
From India, Madras
Is there any caselaw or anything to quote so as to establish that 'food allowance' cannot be defined as 'cash value of food concession' and therfore would not attract PF contribution?
Regards,
Govardhan
From India, Madras
The thing is your are not to prove the same so you don't require any law. (Still there is a case but I am not able to spot it. Somewhere around 2002 if you are able to spot it). The Enforcement Officer or the RPFC has to do that Vice-Versa that food allowance means food concession and issue a notification or scheldule or Amendment, in lieu of that, though state amendments are not applicable in most of the occasions since it is a central Act and has very little to do with respective states.
If you refer explanation 1 to Section 6, it indicates that Food Allowanace will attract PF deduction. Please refer any case laws which states that PF is not deductible on Food Allowance.
Dear All,
Can anyone show me any court case where the the Court has upheld inclusion of Food Allowance in the computation of contributions.
Allowance is paid by an Employer in cash on fulfillment of service contract, it is paid on a periodic basis as mentioned in the service agreement. The allowance has no relation to the expenditure incurred under the head it is paid. For example, Conveyance Allowance is fixed irrespective of the employee incurs on conveyance. Similary, if you are paying Food Allowance, the amount remains the same whether you have food at the road side or 5 Star Hotel.
While in cash value of food concession, the Employer does not make any payment in cash but absorbs cost excess of concession. For example, if the cost of Rice is Rs. 10 per Kg and the employees receive monthly ration of 5 Kg Rice @ Rs. 7 per Kg, the cash value of Food Concession per month is Rs. 15 (Rs 3 per Kg) and must be added while calculating PF. This type of cases are usually present in Police, Armed Forces and was prevalent in many PSUs which use to run subsidised Canteen.
So, Food allowance can not be brought under PF and it can never be equated or is in no way similar to Cash Value of Food Concession.
In the end, I would like to state that I feel, if there is a Cost Canteen present in the establishment where people have food and is the only place where the employees can have food and there is no other place available or it is compulsory for all employees to have meals in that canteen only, then and only then can you equate Food Allowance and Cash Value of Food Concession.
Regards,
SC
From India, Thane
Can anyone show me any court case where the the Court has upheld inclusion of Food Allowance in the computation of contributions.
Allowance is paid by an Employer in cash on fulfillment of service contract, it is paid on a periodic basis as mentioned in the service agreement. The allowance has no relation to the expenditure incurred under the head it is paid. For example, Conveyance Allowance is fixed irrespective of the employee incurs on conveyance. Similary, if you are paying Food Allowance, the amount remains the same whether you have food at the road side or 5 Star Hotel.
While in cash value of food concession, the Employer does not make any payment in cash but absorbs cost excess of concession. For example, if the cost of Rice is Rs. 10 per Kg and the employees receive monthly ration of 5 Kg Rice @ Rs. 7 per Kg, the cash value of Food Concession per month is Rs. 15 (Rs 3 per Kg) and must be added while calculating PF. This type of cases are usually present in Police, Armed Forces and was prevalent in many PSUs which use to run subsidised Canteen.
So, Food allowance can not be brought under PF and it can never be equated or is in no way similar to Cash Value of Food Concession.
In the end, I would like to state that I feel, if there is a Cost Canteen present in the establishment where people have food and is the only place where the employees can have food and there is no other place available or it is compulsory for all employees to have meals in that canteen only, then and only then can you equate Food Allowance and Cash Value of Food Concession.
Regards,
SC
From India, Thane
Dear SC
You have cited very nice examples to prove your point.
But regarding the canteen part you mentioned, as we have the case in our company, we also pay food allowance and also have a canteen on our work site, which is the only place on site (up on Hills) to have food.
But the canteen is run on no profit no loss basis as per Contract Labour Act (1970) and State Rules (1971). Thus we are not providing concession of any sort to the employees on food consumption. Therefore this also does not invite PF deductions.
Aby
You have cited very nice examples to prove your point.
But regarding the canteen part you mentioned, as we have the case in our company, we also pay food allowance and also have a canteen on our work site, which is the only place on site (up on Hills) to have food.
But the canteen is run on no profit no loss basis as per Contract Labour Act (1970) and State Rules (1971). Thus we are not providing concession of any sort to the employees on food consumption. Therefore this also does not invite PF deductions.
Aby
Dear Aby and Govardhan,
First Aby, do the following conditions apply:
(i)Canteen/Food Allowance?
(ii) Is it compulsory for all Workers to have food at the Canteen or can they bring Food from Home at eat it?
If you pay Canteen/Food Allowance and it is compulsory to have Food in Canteen then PF Inspector can (not must or shall and depends on his interpretation) claim inclusion of the same.
Now Govardhan, To avoid any more interactions just change the name of the allowance by a circular. First abolish it and then bring out a second circular giving the same amount by any other name you feel it (Dont Give the name Meal or Canteen :P ).
Regards,
SC
From India, Thane
First Aby, do the following conditions apply:
(i)Canteen/Food Allowance?
(ii) Is it compulsory for all Workers to have food at the Canteen or can they bring Food from Home at eat it?
If you pay Canteen/Food Allowance and it is compulsory to have Food in Canteen then PF Inspector can (not must or shall and depends on his interpretation) claim inclusion of the same.
Now Govardhan, To avoid any more interactions just change the name of the allowance by a circular. First abolish it and then bring out a second circular giving the same amount by any other name you feel it (Dont Give the name Meal or Canteen :P ).
Regards,
SC
From India, Thane
Dear SC,
Food Allowance provided is a fixed amount ( Only Rs.200).
Canteen is different. ( Somewhat Diet rate like Co-operative Mess). Approximately Rs.25/- for three meals.
Food from outside can also be consumed in the canteen and there is no restriction from that ( though not specifically mentioned anywhere) and no compulsion to have food in the canteen as well. It is a canteen by the workers', of the worker's and for the workers'.
Dear Govardhan,
We dont' provide food concession and thus no PF on the same is deducted.
Aby
Food Allowance provided is a fixed amount ( Only Rs.200).
Canteen is different. ( Somewhat Diet rate like Co-operative Mess). Approximately Rs.25/- for three meals.
Food from outside can also be consumed in the canteen and there is no restriction from that ( though not specifically mentioned anywhere) and no compulsion to have food in the canteen as well. It is a canteen by the workers', of the worker's and for the workers'.
Dear Govardhan,
We dont' provide food concession and thus no PF on the same is deducted.
Aby
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Maharashtra Special allowance Notification July 14 to Dec 14.pdf
Food .doc