You could be in for an unpleasant surprise when you look at your salary slip next month, if the Labour Ministry has its way. The ministry has proposed that house rent, gratuity, traveling and other allowances be calculated as part of the “contributing wages” on which provident fund would be deducted. This would mean higher contributions to your PF each month, and a cut in your take home pay.
The proposal is part of the final amendments of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, that has also sought to increase PF deductions to 12 per cent of the contributing wages from the current rate of 10 per cent.
This proposal is a departure from the current method of calculating the PF contributions in which PF is deducted only from basic wages.
The comes due to the different wage structures followed by establishments and High Court rulings. “To bring uniformity and transparency in the calculation of contribution payable by the employers, the definition of the contributing wages is proposed to be included. Specific details of allowances included or excluded for the purpose of PF contribution have been mentioned to avoid any ambiguity,” the labour ministry said.