Provident Fund deduction related litigations with the EPFO is likely to reduce after the Supreme Court ruling that special allowance paid by an employer is part of basic wages for EPF dues computation.
The apex court in its judgement has ruled that special allowance is part of the basic wages for computing the employees provident fund (EPF). The employer as well as the employee pay 12 per cent of basic wages each towards contribution for social security scheme run by the Employees' Provident Fund Organisation (EPFO).
"The order just upheld the existing sections of the EPF Act. After this ruling, it is expected that litigations related to deductions toward provident fund will be reduced," RPFC Navendu Rai said on the sidelines of a seminar organised by the ICC on the EPF Act.
The apex court decision came when it was dealing with a question on whether special allowances paid by an establishment to its employees would fall within the expression "basic wages" under the provision of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 for computation of deduction towards provident fund.
Meanwhile, the Provident Fund (PF) balance transferred from one's ex-employer will become an automated process as the EPFO is doing away with the manual process in place now, Additional CPFC EPFO, S K Sangma said.
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