Is PF Applicable On PF Charges

Dear All,
Query: Is PF is applicable on Service Charges.
PF inspector inspected our PF records and raised a query that the service charges you are showing in your balance sheet it is a form of TIP and having income for employees so there is applicability of PF from both the part employer & employee.
How we are handling service charge:-
1.It is coming from customer side when they are paying their bill (amount mentioned in bill also).
2. At the month end whole collection is distributed among employees as per their monthly rewards points after deduction of breakages. But not with salary and even not highlighted in Salary Slip.
3.We are following minimum basic salary for PF i.e 6500/-. If Basic + DA more than 6500/- then PF deduction on 6500/- and if Basic + DA less than 6500/- then PF deduction on actual.
[B]Please give your expert advice. PF written cases & judgment will be appreciated.[/

PF will not be applicable as it is reward income and not a fixed income in the employee's hand.
if you pay fixed amount every month to the employees then only it will attract PF.

Dear,

Give the copy of "THE EMPLOYEES’ PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952" & say to read and under stand following Sub Section of Section 2

2. Definitions. - In this Act, unless the context otherwise requires, -

(a) “Appropriate Government” means -

(i) in relation to an establishment belonging to, or under the control of, the Central Government or in relation to, an establishment

connected with a railway company, a major port, a mine or an oil-filed or a controlled industry or in relation to an establishment having

departments or branches in more than one State, the Central Government: and

(ii) in relation to any other establishment, the State Government:

(aa) “authorised officer” means the Central Provident Fund Commissioner, Additional Central Provident Fund Commissioner, Deputy

Provident Fund Commissioner, Regional Provident Fund Commissioner or such other officer as may be authorised by the Central

Government, by notification in the Official Gazette;

(b) “basic wages” means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either

case in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include-

(i) the cash value of any food concession;

(ii) any dearness allowance that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living, house-rent allowance, overtime allowance, bonus, commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment;

(iii)any presents made by the employer;

Amit Kumar Tawar

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