Effect of Supreme Court judgement on PF computation

After the recent supreme court judgment on PF deduction on allowances, where the court has ruled out that the PF contribution will be on the total amount including all the allowances paid to an employee & not just on the basic salary. All allowances which are paid on regular basis to the employee are subject to PF contribution (except HRA, over time, Bonus, commission & any variable amounts).

For more detail on the Supreme Court judgment please go to the below link.

Now, after this judgment how the PF computation will change, that can be explained with the help of few examples given below.

ParticularsSalary structurePF calculation
If gross salary is
less than Rs 15000/-
per month
Basic 9,000/-
HRA 2,000/-
Spl. Allw 1,000/-
Over Time 300/-
Gross 12,300/-
Old PF calculation:
9000*12%=1080/-

New PF calculation:
10000*12%=1200/-
If gross salary is
more than Rs 15000/-
per month but basic
is less than Rs 15000/-
Basic 10,000/-
HRA 2,000/-
Spl. Allw 4,000/-
Over Time 500/-
Gross 16,500/-
Old PF calculation:
10000*12%=1200/-

New PF calculation:
14000*12%=1680/-
If gross salary is more than
Rs 15000/- per month
but basic is less than
Rs 15000/- (where statutory
wage limit is applicable)
Basic 10,000/-
HRA 5,000/-
Spl. Allw 6,000/-
Conv Allw 800/-
Gross 21,800/-
Old PF calculation:
10000*12%=1200/-

New PF calculation:
15000*12%=1800/-
If gross salary is more
than Rs 15000/- per
month & basic is also
more than Rs 15000/-
(no change in this case)
Basic 18,000/-
HRA 9,000/-
Spl. Allw 6,000/-
Sale comm 2000/-
Gross 35,000/-
If Old PF calculation:
15000*12%=1800/-
New PF calculation:
15000*12%=1800/-

If Old PF calculation:
18000*12%=2160/-
New PF calculation:
18000*12%=2160/-

Hope this will give you  a better clarification on PF computation for salary processing.

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