In what will have financial ramifications for establishments, the Supreme Court on 28/2/19 ruled that
employers cannot segregate ‘special allowance’ from basic wages and must include it for calculation of
provident fund (PF) deductions from employees and their own matching contribution.
A bench of Justices Arun Mishra and Naveen Sinha dismissed appeals filed by many companies
questioning the Provident Fund Commissioner’s decision to club basic pay with special allowances for
the purpose of deduction of PF and matching contribution by employers.
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