An amount of ₹ 2,500 contributed by Harish (employee of M/s Nanda Enterprises) towards his own provident fund is a part of compensation of employees

False,

Any contribution made by an employee towards any social security scheme is not a part of the compensation of employees.

Explanation;-

An employee contributes a certain percentage of its basic salary towards the social security scheme. But it is contributed from the wages and salaries.

In other words, it is already a part of the wages and salaries it is not an independent part of the compensation of employees.

If it is added again separately, it will lead to double counting.

The same percentage of the amount is contributed by the employer towards the social security scheme.

Employer’s contribution to social security scheme is part of the compensation of employee.

The formula is:

Compensation of employee = Wages and Salaries + Employer’s contribution to social security scheme.