The provisions regarding calculation of Worker’s Welfare Fund are given in section 4 of Worker’s Welfar Fund Ordinance, 1971. Whereas, the provisions related to calculation of Worker’s Participation Fund are given in section 3 of Companies Profits (Workers’ Participation) Act, 1968.
According to Worker’s Welfar Fund Ordinance, 1971, every industrial establishment shall contribute to Worker’s Welfare Fund an amount equal to two percent (2%) of total income provided that total income for that year is not less then 5 lac rupees (500,000). In other words if total income is less than 5 lac then entity is not required to contribute anything towards WWF. Mathematically it is as follows:
If total income is Rs.500,000 or above then:
2% of total income of the year
According to Companies Profits (Workers’ Participation) Act, 1968, every company is required to pay five percent (5%) of its profits to Worker’s Participation Fund every year. However, there were some confusions whether such amount should be calculated before charging such WPPF or after WPPF. In this respect, opinion was sought by ICAP and it was made clear that WPPF amount is calculated on profts as per audited financial statements before charging such WPPF.
Mathematically it can be expressed as follows:
5% of company’s profits