PF on Minimum wages

Dear Mr.Kumar.

In the EPF Act Minimum wages is not defined any where on which amount the epf  is payable.Generally  the industries are dedicting the EPF on a basic salaries of 40 to 60%.We have recently faced an inspection the same point was raised by the Inspecting authority and we debate on the minimum basic figures,but they dont have any written parameteres on the minimum wage related to the EPF act even in the Gratuity act the minimum wages is clearly defined that no one can pay the gratuity less than minimum wages basic,so it is a debate issue with the epf authority to deposit the epf on a inimum wages.

 

Regards.

S.Saini 

Dear queries, don't you give you break up the wages i.e. basic, DA, HRA etc. Are you paying consolidated salary, more details would help apt clarification.

vasudevan

Dear Sir,

In the minimum wages Act S. 2(h) defines minimum wages which according to definition includes Basic & DA only and Provident fund Act provides deduction on Basic & DA only. Thats why PF department is insisting on deduction on minimum wages. Both Acts are attached for your perusal and relevent paras highlighted.

Thanks

Avinash

Mr. Avinash's answer is correct, since the minimum wages refers only the Basic & DA, on the entire salary PF should be paid.  Also there no written rule in the Act for the % of Basic on the Gross Salary, the dept is having an internal circular for the 60% of Gross Salary should be fixed as Basic Salary if the Basic is less than Rs. 6500/-. 

regards

srinivasan

There is actually a supreme court judgement regarding that " PF must be deducted on minimum wages even if it is more then the basic wages" I will post if i find some thing more about it.

In May 2011 PFC has issued an internal circular advising their teams to ensure that Minimum Wage to be considered for deduction of PF. A copy of the same is attached for information to all of us.