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Deepak Parmar (Accounts Manager)     21 January 2011

Help Required Urgent - EPF on Gross Salary - Validity

Dear Sir, My Company is deducting the EPF on Gross Salary which includes HRA, Medical, Conveynace & Other Allowances also.

When I made complaint to the Company, they say since we ar deducting same thing for all & we are doing since last few years, now we can not change, as the company has given Gross Salary as Base Salary.

So does it has validity where the company deducts EPF on Gross Salary including all the allowances.

And does it effects our TDS / Form 16,

And the does this is legal.



 8 Replies

Kamal Prasoon Sinha (Service)     31 January 2011

EPF should be deducted and contributed only on basic salary and not on gross salary.



Deepak Parmar (Accounts Manager)     31 January 2011

Dear Sir,

But now they are deducting on Gross Salary, Should I bring to there notice, that they should deduct on my basic only.

Avinash Kumar Sharma (Sr. Manager HR)     31 January 2011

Yes, PF should be deducted on Salary only which includes Basic & DA. You should advice them to take proper guidlines from legal expert or PF department itself. I also request learned members like Mr. Tripathi to thow some light on this issue.

1 Like

Kamal Prasoon Sinha (Service)     01 February 2011

Dear Deepak,

Section 2. (b) of the 'Employees Provident Fund and Miscellaneous Provisions Act, 1952' clearly defines basic wages as

"basic wages" means all emoluments which are earned by an employee while on duty or 10[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:
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;
(iii) any presents made by the employer;

There is no confusion in the definition of basic wages of the act. I do not understand why your employer is deducting PF on gross salary. Sow the te bare act.


Kamal Prasoon

1 Like

Deepak Parmar (Accounts Manager)     01 February 2011

Dear Sir,

I have spoken to our EPF Consultant, regarding this, he says since now we have declared your gross salary, as the basic salary, we can not change the salary, means he says that we cannot now reduce your salary now, as in EPF, once salary is declared, you cannot reduce your salary.

I also requested, that since my overall gross salary is above Rs.25000/- on which EPF is deducted, should I write a letter that this is my Gross Salary & my Basic Salary is Rs.12000/-, as EPF Act says that if your salary is above Rs.6000/- it is not compulsary to deduct the EPF, it will be voluntry.

So Sir, Can you give me suggestion on this how solve this issue with EPF Department & the employer

Can we write a letter to EPF Department that this was an error done, & we want to rectilfy now, as all the employees EPF is deducted on Gross Salary only.

Can give me solution to this,

Thanking you - Deepak

Avinash Kumar Sharma (Sr. Manager HR)     01 February 2011

S. 6  specify that for the sake of contribution wages means basic+ DA. I am attaching pdf file with highlighted S.6. In this where 10% is mentioned is now changed to 12% by notification of 1997. I urge the members to go through the Act.

Attached File : 43 43 emp provt fund n misc prov.pdf downloaded: 286 times

Deepak Parmar (Accounts Manager)     02 February 2011

Dear Sir,


Now How to Solve the Problem, What is the Way to Start the Deduction on Basic & DA & not on Gross

Avinash Kumar Sharma (Sr. Manager HR)     02 February 2011

Dear Sir,

It is better to take proper guidlines from EPF Department itself. It is also very important how your company shows salary structure in their salary register or salary sheet. If in that register your gross salary is shown as basic & DA then nothing can be done but it is better to take into confidence EPF Department.



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