IS PF DEDUCTED ON SPECIAL ALLOWANCE OR NOT?.. CiteLegal
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chandrakant Started The Discussion:

Dear Sir, my question is weather special allowance is counted for pf or not , with the Judgement . Regards Chandrakant Vishwakarma

jitendersyadav -  Member Since: Sep 2008
No. No allowances will be totalled to calculate the PF deduction. Except DA. Rgds/Jitender

malikjs -  Member Since: Oct 2008
dear
sorry i donot agree with mr jitendra PF should be deducted on special allowance .you have to clarify the allowance ,what it is .if not clarified than Pf should be deducted on that .further clarification regarding judgement u will get very soon .
tks
j s malikj
9810557181

ANISH PARDESHI -  Member Since: Oct 2008
Quote:
Originally Posted by malikjs
dear
sorry i donot agree with mr jitendra PF should be deducted on special allowance .you have to clarify the allowance ,what it is .if not clarified than Pf should be deducted on that .further clarification regarding judgement u will get very soon .
tks
j s malikj
9810557181
Dear Mr. Malik,

Please send me the judgment if you have any regarding PF on special allowance, because in my company we are paying huge amount under special allowance. Send it to my id on

Regards

Anish

malikjs -  Member Since: Oct 2008
dear
same was decided by calcutta high court in the case of provident fund commissiner WB
vs svivekanand vidya mandir in 2005.this judgement is given in LLR page no 399.
so special allowance is to be treated as basic wages for the purpose of PF deduction.
tks
j s malik

mohigupta -  Member Since: Oct 2008
Hi pls provide the notification copy, since its Highcourt order, one may still go to supreme court for final verdict, till that time, i do not think we should deduct the PF on special allowance.

arunravi -  Member Since: Nov 2008
Special allowance is to be considered for PF calculation unless specified what allowance it is! DA is not considered. Regards, Arun,Kuwait

Madhu.T.K -  Member Since: Oct 2008
This thread was stared in 2008 and hence it is very old one, but still considering its importance, I would like to state significance of special allowance.

Special allowance which is paid to all employees should be treated as part of remuneration and will form part of salary. At the same time, special allowance which is paid to a particular category of employees considering the special skill which is applied to to the work shall be treated as some thing 'special' and that which not form part of salary for the purpose of PF deduction.

The Madras High Court in R Ramanathan Chettiar Jewellers, Madurai vs. Regional PF Commissioner, Madurai – 1988 (ii) LLJ 045, has held that where the special allowance is not paid under contract of employment, settlement or award but paid purely out of management’s own will and pleasure then such special allowance would not be taken into account for the purpose of calculating contribution payable under the Act. This ruling lays stress that a payment which is not of a regular nature and is paid purely in the discretion of the management, would not be available for PF contribution.

In Associated Cement Company Ltd. and Ors. v. R.M. Gandhi, Regional Provident Fund Commissioner, Gujarat(1995-III-LLJ(Suppl.)-368), it has been held that ad hoc payments made to ‘eligible employees and not to all employees’ under agreement does not form part of basic wages for PF contribution.

The Apex Court while giving verdict in Bridges and Roofs (India) Ltd Vs. Union of India [1963 (2) LLJ 490], has said that "it seems that the basis of inclusion in Section 6 (of Employees provident Fund and Miscellaneous provisions Act, 1952)and exclusion in Clause (ii) is that whatever is payable in all concerns and is earned by all permanent employees is included for the purpose of contribution under Section 6 but whatever is not payable by all concerns or may not be earned by all employees of concern is excluded for the purposes of contribution."

Therefore, special allowance (which is at par with DA in many states) should be treated as part of salary for the purpose of PF contribution.

Regards,

Madhu.T.K

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