BASAVARAJAPPA.C (HR) 08 December 2009

Retaining Allowance

Dear Sir's

We would like to introduce "Retaining Allowance" as one of the additional salary component for our employees, kindly advise whether it attracts PF in addition to Basic & DA.

Further, kindly forward any Legal enactments / Supreme court latest judgements showng the salary components which are attracting PF contributions.

Regards

Basavaraj

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2 Replies

V. VASUDEVAN (LEGAL COUNSEL) 08 December 2009

Dear Mr. Basavaraj, Section 5 of the EPF & Misc.Provisions Act, covers Retaining Allowance for the purpose of contribution. This provision also deals with the components to be included for this purpose. Please review this and revert in case you still need any case law. Vasudevan

Section 6 - Contributions and matters which may be provided for in Schemes

¹ [***] Thecontribution which shall be paid by the employer to the Fund shall be ² [³ [ten percent]] of the basic wages, ⁴ [dearness allowance and retaining allowance (ifany)] for the time being payable to each of the employees ⁵ [(whetheremployed by him directly or by or through a contractor)], and the employees'contribution shall be equal to the contribution payable by the employer inrespect of him and may, ⁶ [if any employee so desires, be an amount exceedings³ [ten per cent.] of his basic wages, dearness allowance and retaining allowance(if any), subject to the condition that the employer shall not be under anobligation to pay any contribution over and above his contribution payable underthis section]:

⁶ [Providedthat in its application to any establishment or class of establishments whichthe Central Government, after making such inquiry as it deems fit, may, bynotification in the Official Gazette specify, this section shall be subject tothe modification that for the words ⁷ ["ten per cent."], at both theplaces where they occur, the words ⁷ ["twelve per cent."] shall besubstituted:]

Providedfurther that where the amount of any contribution payable under this Actinvolves a fraction of a rupees, the Scheme may provide for the rounding off ofsuch fraction to the nearest rupee, half of a rupee or quarter of a rupee.

⁸ [Explanation1].--For the purposes of this ⁹ [section], dearness allowanceshallbe deemed to include also the cash value of any food concession allowed to theemployee.

¹⁰ [Explanation2.--For the purposes of this ⁹ [section], "retaining allowance" meansan allowance payable for the time being to an employee of any factory or otherestablishment during any period in which the establishment is not working, forretaining his services.]