PF CONTRIBUTION ON LEAVE ENCASHMENT ********URGENT

Dear friends
I am new to this forum and seeking your advise for the first time: it is very urgent and I have to give feedback to my management immediately
OUR COMPANY IS PAYING PF CONTIBUTION ON GROSS PAY INSTEAD OF BASIC+DA+ VDA SINCE LONG TIME.
NOW THE PROBLEM IS WITH PF CONTRIBUTION ON LEAVE ENCASHMENT.
OUR ACCOUNTS SAY WE SHOULD ONLY CALCULATE ON BASIC AND DA ON THE LEAVE ENCASHMENT AND PAY PF CONTRIBUTION OF 12%
BUT MY HR COLLEAGUE SAYS WE SHOULD CALCULATE 12% ON THE ENTIRE AMOUNT OF LEAVE ENCASHMENT
CAN ANY OF THE EXPERT IN LAW EDUCATE ME ON THE FOLLOWING
WHAT DOES PF COMMISSIONARATE MEAN ABOUT: PF CONTRIBUTION ON LEAVE ENCASHMENT.
very urgent reply is solicited. calculation procedure is also apreciated
-MOHAN SHARMA :?:
5th July 2006

Dear Mohan Sharma,
Welcome to the forum..
Just check on this as far I know that PF is applicable on basic & DA and not VDA. However check and revert.
Your accounts deptt is correct and please do a search on the site ( which is on the top left – one would get the notification on this.
Cheers,
Rajat
5th July 2006 From India, Pune

hi
PF contribution on Leave encashment is payable only on Basic and Da
as being done on salary as per act.
Considering gross for PF deductions is a vouluntary act.Similar is the leave encashmnent status.
hrh-rajaram
6th July 2006 From United States

Hi.
PF contribution is given on Basic and D.A., but in case the D.A. is not included in the salary strucyture it is calculated on the basic only.
Kindly read about the PF laws to know more on the PF contribution your company is calculating on the gross salary, I dont think that is right.
Archna
6th July 2006 From India, Delhi

PF is calculated on Basic i.e 12% and with the latest amendemnts PF also should be paid for Leave Encashment. IF there is a DA concept PF is calculated on BASIC+DA
Hope this clairifies ur doubt
Mahesh
8th July 2006 From India, Hyderabad

PF is calculated on Basic ie. 12 % is salary str doesnt contain DA but is it contains DA then PF is calculated on PF + DA. L
Leave encashment is subject to PF deduction ie 12 % of basic or basic + DA depending upon the salary str.
Deepa
8th July 2006 From India, Gurgaon

Hi, what your accounts dept said is right..Pf deduction is from 12% of BAsic +DA(Employer & employee contribution) but for ESI 4.75 & 1.75% respectively the deducton is calculated from the gross.
10th July 2006 From India, Madras

HI,
As per p.f. Act contribution is subjected to wages of the employee's

as per the definition wages means (Basic + DA + Food Concession)

If we calculate the pf contribution on leave encashment. Kindly let me know on which head in payroll we have to put the amount of leave encashment.

1. Should we distribute that amount in Basic + DA + Food Concession?
2. Should we put that amount as Arrear?
3. Should we put that amount on a new head "leave encashment"?

If we follow 1. The amount of earning, increase in that particular month, what should our clarification of this increase

If we follow 2. What should our clarification of this arrear.
If we follow 3. Keeping in view the definition of wages as per pf department (Basic + DA + Food Concession) can we deduct p.f. on this head

Kindly clear my confusion

Regards
R.C.Joshi

12th June 2008

Dear Friends,
Previously PF calculated only on Basic+ DA & on Leave encashment but as per latest amendments on 12.03.2008 There will be no deduction of PF on Leave encashment. Please find attached Supreme Court Judgement copy for your reference.
12th June 2008 From India, Delhi

Attached Files (Download Requires Membership)

SC -PF judgment on No PF on Leave encashment.doc (52.5 KB, 2003 views)

Point 1
You are paying PF contribution pn Gross. You will continue to the same.
Point 2
Let me assume that your are not in Tamilnadu where High Court Judgement is clear about PF contribution on KLeave encashemnt.
Are you paying Gross for Leave encahement or aqre you paying only Basis plus DA plus VDA
If you are paying Gross as leave encashement and if your practice is is to contribute PF on gross, then you need to pay on gross.
If you are paying only Basic plus DA plus VDA for leave encashment, then you need to contribute only on these three elements.
Siva
12th June 2008 From India, Chennai