[cajobportal Insights] Will the Supreme Court judgement reduce your takehome salary

Yesterday, the Supreme Court issued a combined judgement on cases involving the Regional Provident Fund Commissioner ( RPFC) Vs Vivekanand Vidyamandir , Surya Roshni, U-Flex, Montage Enterprises and Saint Gobain (Attached the judgement https://bit.ly/2T61z40)

The question placed before the bench for adjudication was whether special allowances paid by an establishment to its employees will fall within the expression ‘basic wages’ under Section 2(b)(ii) read with Section 6 of the PF Act for computation of deduction towards PF.

Clause 14 of the judgment read, “The wage structure and the components of salary have been examined on facts, both by the authority and the appellate authority under the Act, which have arrived at a factual conclusion that allowances in question were essentially a part of the basic wage camouflaged as part of an allowance so as to avoid deduction and contribution accordingly to the PF account of the employees.

The bench cited the logic that allowances must be variable in nature to merit exclusion, not be paid across the board to all and one must work beyond the normal work to be eligible to earn this extra amount

Technically, you may not be impact as PF is not mandatory beyond the 15k threshold , thus only those with basic salary and allowances up to Rs 15,000 may have a lower take home

In case of a 9th Sep, 2011 judgement of SC in case of Marathwada Gramin Bank Karamchari Sanghatana and Another Vs Management of Marathwada Gramin Bank, it was ruled that PF authorities could not force an employer to contribute beyond the statutory liability. Hence In May, 2014, PF authorities issued instructions to field officers that they should not force employers to contribute more than the statutory wage ceiling (of Rs 15000) following decision of the apex court in the Marathwada Gramin Bank case

A higher PF deduction always means a more secure retirement for many but a millennial would prefer a higher take home

How would you balance the contradictions?

Whats your view?

Thanks & Regards!!

Sonia Singal : CA Job Portal