Yes, recently SC ruled this.
Special Allowance
While calculating PF do we need to consider special allowance too with Basic Salary and DA. Previously it was not considered but in march a court ruling came. Kindly assist me with the same.
Asked 6 years ago in Labour
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10 Answers
What should be the new salary structure where PF contribution could be minimized?
Asked 6 years ago
SC has ruled that employers cannot segregate 'special allowance' from basic wages for purpose of PF deductions.
2) The order will be applicable to those with a basic salary and allowances up to Rs 15,000 as PF contribution. Beyond that, PF is not mandatory,"
Yes it's right
The Supreme Court ruled this week that employers must consider special allowances paid to the employees as a part of the "basic wage" for deduction towards provident fund. The apex court decision came when it was dealing with a question on whether special allowances paid by an establishment to its employees would fall within the expression "basic wages" under the provision of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 for computation of deduction towards provident fund.
Following the SC verdict, the Employees' Provident Fund Organisation (EPFO) has said it would take stringent action against firms not factoring special allowance for EPF computation. The top court had rules that special allowance is part of the basic wages for computing the employee's provident fund (EPF).
Special Allowance paid continuously with the salary has to be counted for the purpose otherwise if given variably then no need.
Hello,
The Supreme Court has held that special allowances paid by an employer to its employees have to be included in "basic wage" for deduction towards provident fund.
Regards
Recently govt. proposed the amendment to reduce contribution of PF and profitable for employer.
The PF is calculated on the basic salary and the dearness allowance alone and not on any special allowance.
If you have the court ruling in this regard please furnish the details.
In order to Calculate take-home salary, subtract the Income Tax, Provident Fund (PF) and Professional Tax from the Gross Salary.
- Step 1: Calculate gross salary. Gross Salary = CTC – (EPF + Gratuity)
- Step 2: Calculate taxable income. ...
- Step 3: Calculate income tax** ...
- Step 4: Calculating in-hand/take home salary.
EPFO rules call for deducting 12.5% of the employee's basic pay as PF contribution and an equal amount has to be chipped in by the employer. ... It is a part of CTC as the total expenditure incurred on the employee each month,
- As per the information mentioned in the present query, makes it clear that the law has been changed by a precedent of the Apex court.
- Yes, it was not added in the last, but now it has been stated as per the amended law of PF.
- But, at the same time the contribution in the PF has been minimised upon certain level.
Yes there is supreme court Ruling regarding addition of Special allowance while calculation of PF
The Supreme Court has held that special allowances paid by an employer to its employees have to be included in "basic wage" for deduction towards provident fund.
The top court said this while dealing with a question on whether special allowances paid by an establishment to its employees would fall within the expression "basic wages" under the provision of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 for computation of deduction towards provident fund.
A bench comprising justices Arun Mishra and Navin Sinha dismissed the appeals filed by several companies challenging the decision of the Provident Fund Commissioner clubbing basic pay with special allowances for deduction towards provident fund.
The Supreme Court ruling is unlikely to impact those with basic salary and special allowances above Rs 15,000 a month.
