Salary for the purpose of pf

Labour & Industrial 589 views 4 replies

Dear All,

If an employee has got following in a year

Basic salary, Dearness allowance, Commission @ fixed percentage of turnover achieved by him, Leave Encashment, Adv salary of two basics etc,

Now my question is - What will be considered as "Salary" for the purpose of calculating PF?

 

 

Replies (4)

Hi

 

Only Basic + DA to be considered.

 

 

Thanks//VaibhavJ

Originally posted by : @ VaibhavJ
Hi
Only Basic + DA to be considered.
Thanks//VaibhavJ

(+)
.
As per the Supreme Court decision in Gestetner Duplicators (P) Ltd. v. CIT (1979) 117 ITR (SC), salary for the purpose of PF contribution includes commission allowed as a fixed percentage of the turnover achieved by the employee.

Dear Deepak,

 

This case law is not relevent for determing salary for the purpose of PF.

 

“basic wages” means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include 

(i) the cash value of any food concession; 

(ii) any dearness allowance that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living, house-rent allowance, overtime allowance, bonus, commission or any other similar allowance payable to the employee in 
respect of his employment or of work done in such employment; 

 

Pl refer:https://www.epfindia.com/EPFAct1952.pdf

 

Thanks//VaibhavJ

 

So, the above mentioned judgement applies only to contribution made under 'Recognised Provident Funds' scheme under Part A of the Fourth Schedule and there is a distinction in contribution under the EPF Act, which does not include commission.


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