What are the components to be considered while contributing to EPF.
We are contributing on basic only. Whether we have to take into consideration of HRA and uniform allowances. CTC being 16000
Basic 8000permonth
HRA 3200permonth
Uniform 1500per month
Other allowance balancing figure. 3300
We have deducted 1200from employee and the same is contributed by company and remitted to Epfo . Do we have to consider other allowance 3300 to calculate PF?
As HRA and uniform allowances are exempted from EPF , we have not considered for EPF calculations.do we have to consider that for calculating EPF as it is below 15000(8000+3300+remaining 3700)
You can also send clarifications to sl. Chandtashekar@yahoo.com or WhatsApp to 8150902999.Pls send notifications if there are for the above stated questions.
From India, Bengaluru
We are contributing on basic only. Whether we have to take into consideration of HRA and uniform allowances. CTC being 16000
Basic 8000permonth
HRA 3200permonth
Uniform 1500per month
Other allowance balancing figure. 3300
We have deducted 1200from employee and the same is contributed by company and remitted to Epfo . Do we have to consider other allowance 3300 to calculate PF?
As HRA and uniform allowances are exempted from EPF , we have not considered for EPF calculations.do we have to consider that for calculating EPF as it is below 15000(8000+3300+remaining 3700)
You can also send clarifications to sl. Chandtashekar@yahoo.com or WhatsApp to 8150902999.Pls send notifications if there are for the above stated questions.
From India, Bengaluru
It is true that HRA and allowances to buy and maintain uniform, washing allowance etc will not qualify for contribution to PF. But if these allowances are universally paid to all the employees, then it MAY qualify for contribution. Suppose, if the HRA is paid only to those employees who reside in leased houses, then it is an allowance but if it is paid to all employees without reference to their ownership or lease status of residence then it shall be part of salary only. In the former case HRA will be a reimbursement and is paid even if the employee is absent without leave for a few days. But in the latter case it is not a reimbursement and the proportionate amount will be deducted when an employee takes even a single day LOP.
Regarding uniform allowance, I would like to say that this is an allowance to buy uniform. Normally it will be excluded because it is a payment made once in a year. You cannot pay uniform allowance every month because the life of a uniform is not one month. Obviously, employees who are given uniform will be paid washing allowance (to maintain the uniform) and the amount will not form part of wages either under ESI or under PF because the objective of such payment is specific. However, you cannot have a huge amount as washing allowance in the salary structure. Including an amount which is much above the cost of maintaining uniform shall be viewed as an attempt to reduce the burden of contributions to wards statutory funds like ESI and EPF. For a salary of Rs 16000, an amount of Rs 1500 towards uniform every month will not be allowed anyway.
Other allowance is yet another component of salary which will always create problems. There are various court rulings which says that any allowance paid universally to all the employees should be treated as part of basic salary. As such other allowance should be considered for payment of PF, Bonus, Gratuity etc.
Now, coming to the present situation, I would say that you may consider a salary excluding HRA as base for PF contribution. If that amount is equal to or more than the minimum wages fixed by the government in respect of that trade/ employment then it will take care of your future liabilities of bonus and gratuity also.
From India, Kannur
4243Regarding uniform allowance, I would like to say that this is an allowance to buy uniform. Normally it will be excluded because it is a payment made once in a year. You cannot pay uniform allowance every month because the life of a uniform is not one month. Obviously, employees who are given uniform will be paid washing allowance (to maintain the uniform) and the amount will not form part of wages either under ESI or under PF because the objective of such payment is specific. However, you cannot have a huge amount as washing allowance in the salary structure. Including an amount which is much above the cost of maintaining uniform shall be viewed as an attempt to reduce the burden of contributions to wards statutory funds like ESI and EPF. For a salary of Rs 16000, an amount of Rs 1500 towards uniform every month will not be allowed anyway.
Other allowance is yet another component of salary which will always create problems. There are various court rulings which says that any allowance paid universally to all the employees should be treated as part of basic salary. As such other allowance should be considered for payment of PF, Bonus, Gratuity etc.
Now, coming to the present situation, I would say that you may consider a salary excluding HRA as base for PF contribution. If that amount is equal to or more than the minimum wages fixed by the government in respect of that trade/ employment then it will take care of your future liabilities of bonus and gratuity also.
From India, Kannur
As per Apex Court verdict and considering the definition of Basic Wages as per EPFO which has not been amended , the PF contribution should be on basic, DA , All other allowances paid regularly on monthly basis except HRA as per Basic Wages Definition .
S K Bandyopadhyay ( WB, Howrah )
CEO USD HR Solutions
+91 98310 81531
skb@usdhrs.in
www.usdhrs.in
From India, New Delhi
S K Bandyopadhyay ( WB, Howrah )
CEO USD HR Solutions
+91 98310 81531
skb@usdhrs.in
www.usdhrs.in
From India, New Delhi
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.
EPF ON LINE REGN. USER MANUAL.pdf