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ARTICLE · 22 DECEMBER 2016

The Basic Wages Conundrum Under The EPF Act

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As per the Employees' Provident Funds Scheme, 1952 (Scheme), contributions payable by an employee must be at the rate of 12% of the basic wages.

IndiaEmployment and HR
Pallavi Thacholi
Pallavi Thacholi
Kirti Krishna
Kirti Krishna
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BACKGROUND

As per the Employees' Provident Funds Scheme, 1952 (Scheme), contributions payable by an employee must be at the rate of 12% of the basic wages. As per Section 2(b) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (Act), 'basic wages' mean all emoluments which are earned by an employee in accordance with the terms of the contract of employment and which are paid, or payable in cash to such employee. The basic wages, however, do not include: (i) the cash value of any food concession; (ii) any dearness allowance, house-rent allowance, overtime allowance, bonus, commission, or any other similar allowance payable to the employer in respect of his employment or of work done in such employment; and (iii) any presents made by the employer.

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