PF deduction on Gross salary? | MP High court verdict to impact PF deduction across India?

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Retirement fund manager EPFO will seek the legal opinion on implementation of the order of the MP High Court throughout the country under which employers and employees will be required to increase their contributions to the provident fund. “We will seek legal opinion and also the opinion of Ministry of Law and Justice Ministry, through Labour Ministry, on the MP High Court order throughout the country,” Central Provident Fund Commissioner Samirendra Chatterjee said.
The Madhya Pradesh (MP) High Court in its recent order said that regular allowances like conveyance, entertainment, medical etc should be included in the salary while computing the 12 per cent contribution to provident fund.
At present, the provident fund contribution, which is mandatory for all employees, forms 12 per cent of the basic pay. Employer is also required to contribute the matching amount.
The court order would be implemented by the Employees’ Provident Fund Organisation (EPFO) in Madhya Pradesh, Chatterjee said, adding the decision on extending it across the country would be taken after seeking the legal opinion.
The implementation of the order will put extra burden on employer and reduce the take home salary of the employee, as both will be required to enhance their contribution to the retirement fund.
If this order implemented it is going to be huge burden on both employer and employee. Specially employees will have to bear the heat . if we take the example of a worker getting Rs.5000.00 as a total salary his take home will become 3800.00 and from his gross pay Rs.1200.00 will be deducted assuming Rs.5000.00 as CTC
On the positive side, the decision will significantly enhance the corpus of the EPFO, which has recently appointed four fund managers to manage its Rs 3.5 lakh crore, and enhance better returns at the time of retirement for its 4.72 crore subscribers.
 
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