Dear All,
We have recently gone through a PF inspection of one of our units in Rajasthan. During the inspection, PF-EO imposed liability on the Other Allowances being paid to the employees. A huge liability was imposed by the notice given to us. Therefore, kindly guide us on whether other allowances will be part of the basic wage to attract PF contributions. In our salary structure, the basic salary is 50%, and other allowances make up around 20-30% along with other allowances.
Kindly guide. Thank you.
From India, Ghaziabad
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We have recently gone through a PF inspection of one of our units in Rajasthan. During the inspection, PF-EO imposed liability on the Other Allowances being paid to the employees. A huge liability was imposed by the notice given to us. Therefore, kindly guide us on whether other allowances will be part of the basic wage to attract PF contributions. In our salary structure, the basic salary is 50%, and other allowances make up around 20-30% along with other allowances.
Kindly guide. Thank you.
From India, Ghaziabad
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"Other allowance" paid uniformly to all the employees of the establishment will be treated as part of basic wages for PF contribution. This is because basic wages per se are the total wages that an employee earns while on duty or on leave. Therefore, if you have been contributing on basic wages alone, you will have to make it on basic wage and other allowance but subject to a maximum of Rs 15,000. If the PF authorities have clubbed the 'other allowance' in total without capping the total PF qualifying wages to Rs 15,000, that can be challenged when you appear for 7A inquiry (inquiry under section 7 A of the EPF and MP Act).
From India, Kannur
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4483From India, Kannur
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In the PF Act, nowhere has it been mentioned what percentage of monthly gross should be Basic. Prior to the Apex Court Verdict, the majority of organizations were paying PF contributions based on Basic + DA. However, after the verdict in February 2019, most organizations started paying PF contributions based on Monthly gross - HRA. The verdict stated that contributions should be paid on all regular payable allowances, excluding productivity-linked payments, etc.
As the current definition of Basic has not been changed and HRA is on the exclusion list, organizations are following the formula (Monthly gross - HRA) for calculations. The contribution may be restricted up to 15k as of the date of this communication.
S K Bandyopadhyay (WB, Howrah) CEO, USD HR Solutions +91 98310 81531 skb@usdhrs.in USD HR Solutions – To strive towards excellence with effort and integrity
From India, New Delhi
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As the current definition of Basic has not been changed and HRA is on the exclusion list, organizations are following the formula (Monthly gross - HRA) for calculations. The contribution may be restricted up to 15k as of the date of this communication.
S K Bandyopadhyay (WB, Howrah) CEO, USD HR Solutions +91 98310 81531 skb@usdhrs.in USD HR Solutions – To strive towards excellence with effort and integrity
From India, New Delhi
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PF Contribution on not less than Minimum Wage.pdf