Hello everyone,
I was reading the EPF Act 1952, and in Section 2, it defines "basic wages" as all the earnings that an employee receives while working, on leave, or during holidays with pay according to their employment contract. These earnings are provided in cash. However, basic wages do not include:
- The monetary value of any food discounts.
- Any dearness allowance (money paid to employees to counter inflation), house rent allowance, overtime pay, bonuses, commissions, or similar payments related to their employment or work performed.
I'm a bit confused by the statement "similar payments related to employment" at the end. How does one determine what other allowances fall under this category?
From India, Mumbai
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I was reading the EPF Act 1952, and in Section 2, it defines "basic wages" as all the earnings that an employee receives while working, on leave, or during holidays with pay according to their employment contract. These earnings are provided in cash. However, basic wages do not include:
- The monetary value of any food discounts.
- Any dearness allowance (money paid to employees to counter inflation), house rent allowance, overtime pay, bonuses, commissions, or similar payments related to their employment or work performed.
I'm a bit confused by the statement "similar payments related to employment" at the end. How does one determine what other allowances fall under this category?
From India, Mumbai
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As per the Act, Basic & DA are treated as EPF wages.
The Honourable Supreme Court, in the month of February 2019, issued a judgment on the definition of basic wages, which now includes all allowances such as Special Allowance, Travel/Conveyance Allowance, Medical Allowance, and other allowances that are naturally, commonly, and regularly paid to all employees. Subsequently, the EPF department has also issued a circular regarding this.
Since then, in general, all contributions excluding HRA are treated as EPF wages.
From India, Bangalore
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726The Honourable Supreme Court, in the month of February 2019, issued a judgment on the definition of basic wages, which now includes all allowances such as Special Allowance, Travel/Conveyance Allowance, Medical Allowance, and other allowances that are naturally, commonly, and regularly paid to all employees. Subsequently, the EPF department has also issued a circular regarding this.
Since then, in general, all contributions excluding HRA are treated as EPF wages.
From India, Bangalore
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Circular No 1-2018 Processing of income-tax returns under section 143(1) of the Income-tax Act .pdf
EPF Act.ppt