What are the components that do not get covered by the EPF?
From India, Ahmedabad
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From India, Ahmedabad
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All components specified by amounts shall qualify for EPF. Though house rent is not part of the PF qualifying salary, the same paid universally to all employees, irrespective of whether they reside in their own houses or rented houses, shall be taken as part of the salary and not as an allowance excluded from the PF. Incentives, commissions, etc., expressed in percentages and not in certain amounts shall, obviously, be outside the purview of PF.
If the total salary exceeds Rs. 15,000 (as per present law), the amount that exceeds Rs. 15,000 may also be treated as salary that will not qualify for PF.
From India, Kannur
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4764If the total salary exceeds Rs. 15,000 (as per present law), the amount that exceeds Rs. 15,000 may also be treated as salary that will not qualify for PF.
From India, Kannur
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Mr. Madhu,
I think the judgment said all allowances are to be considered except House Rent Allowance (HRA), and no exemption or condition was set for HRA. For other allowances, a condition was provided that they may be exempted if not paid to all on a standard pattern, etc. At least, that is my understanding of the judgment. Are you suggesting that even HRA can be included in the same manner?
From India, Mumbai
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I think the judgment said all allowances are to be considered except House Rent Allowance (HRA), and no exemption or condition was set for HRA. For other allowances, a condition was provided that they may be exempted if not paid to all on a standard pattern, etc. At least, that is my understanding of the judgment. Are you suggesting that even HRA can be included in the same manner?
From India, Mumbai
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HRA, per se, is an allowance apart from the salary. It is payable to those who reside in a rented house and not to all. In a private company, the HRA is a part of the 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 the salary. A similar interpretation can be drawn in the case of gratuity qualifying salary as well. Please go through my post on my blog in this regard.
[Madhu T K: Payment of Gratuity and Gratuity Qualifying Salary](http://madhu-t-k.blogspot.com/2019/10/payment-of-gratuity-and-gratuity.html)
From India, Kannur
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[Madhu T K: Payment of Gratuity and Gratuity Qualifying Salary](http://madhu-t-k.blogspot.com/2019/10/payment-of-gratuity-and-gratuity.html)
From India, Kannur
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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 were paying contributions of PF on Basic & DA only, though in the definition of Basic wages, it is mentioned that it includes all remuneration with the exclusion of HRA, DA, etc. As per Sec -6 of the PF act, contributions are to be paid on Basic, DA & RA.
2. As per the Apex court verdict, all organizations have been paying contributions on (Monthly gross - HRA).
3. In my opinion, as the Apex court has not rejected or amended the definition of Basic Wages, therefore, as per the exclusion list of the definition, HRA is not being considered.
4. Moreover, in the new labor codes, PF contributions will be on wages (Basic & DA) only.
5. I hope all Indian organizations will pay PF contributions and Gratuity payments on Basic & DA only even after the implementation of labor codes also.
S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions +91 98310 81531
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From India, New Delhi
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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 were paying contributions of PF on Basic & DA only, though in the definition of Basic wages, it is mentioned that it includes all remuneration with the exclusion of HRA, DA, etc. As per Sec -6 of the PF act, contributions are to be paid on Basic, DA & RA.
2. As per the Apex court verdict, all organizations have been paying contributions on (Monthly gross - HRA).
3. In my opinion, as the Apex court has not rejected or amended the definition of Basic Wages, therefore, as per the exclusion list of the definition, HRA is not being considered.
4. Moreover, in the new labor codes, PF contributions will be on wages (Basic & DA) only.
5. I hope all Indian organizations will pay PF contributions and Gratuity payments on Basic & DA only even after the implementation of labor codes also.
S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions +91 98310 81531
From India, New Delhi
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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 reference to the new Labour Codes, the definition of Basic has changed. The practice of putting basic at 10% or 15% of the total gross is now not allowed, which is where the entire problem for the SC judgment 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
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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 reference to the new Labour Codes, the definition of Basic has changed. The practice of putting basic at 10% or 15% of the total gross is now not allowed, which is where the entire problem for the SC judgment 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
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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 the salary for all the private establishments. It is not paid separately but it comes along with the 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 the Roofs and Bridges case, an allowance paid universally to all employees should be part of basic wages.
From India, Kannur
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From India, Kannur
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