hi all,
i think,min. wages refer to gross payment. because, the term wage refers basic+da. the never spoke about allowances.
am not sure, but there would be a provision on a min. pf contribution. if you refer the amount of contribution, we can easily figure out, about what would be the min. % of basic.

From India, Hyderabad
Dear Mr Parag,
First of all thanks for Balaji, I agree with their comments, you can say salary bifarcation is depends on area, where you are exixted like metro, a class city whereever........ simply the minimun basic should be the minimum wage and after that or 35 % to 100 % plus nothing or plus benifits its depends on your company.
For further clarification feel free contact me on or 9982814048.
Balram tanwar

From India, Ambala
Basic salary would be between 40 to 60 % of gross salary, but many company dicide this as per his gross laibility to employee monthly or yearly. Thanks & Regards Satyendra Mishra +91-9891090856
From India, New Delhi
Dear Balaji/Dhingra, Thanks for the information regarding salary breakup,If u have that circular copy kindly give us then we will clear about it. With regards, Sameer K Ghosh
From India, Daman
Mr. Sameer, Please see the circular (issued by PFauthorities) and also the judgment issued by the Hon’ble Punjab and Haryana High Court. This is what the confusion all about. Balaji
From India, Madras

Attached Files (Download Requires Membership)
File Type: doc PF circular - splitting of Min wages.doc (29.5 KB, 1495 views)
File Type: pdf spliting of wages for PF permissible - Judgment.pdf (549.6 KB, 1306 views)

Dear Parag,
If you want make salary structure please consult with your sr. managment and Accounts (Income Tax provisions) because there is no such direction in any act for % of basic.

From India, Pune
Dear Balaji, Thanks but in circular it is not define % of salary breakup for higher salary package also not clear for component. Kindly give us your valuable experience. With regards, Sameer K Ghosh
From India, Daman
hai all
i am accepting v.balaji's word
as per my view if the basic is below 60% of the salary there exists the question of DA. and DA will vary as per the consumer price index(CPI).
for every 6months government will revise this CPI, so the salary would be changed accordingly
in order to minimize the risk of DA most of the companies will decide basic as 60% or above
thank to all

From India, Hyderabad
Dear All,

I am just entering my office after attending a workshop convened by Employers' Federation of Southern India (EFSI) which concluded an hour back.

There were a lot of deliberations on splitting of wages into different components. Three PF commissioners (Royapettah, Ambattur and Tambaram jurisdictions) were present and they UNANIMOUSLY SAID THAT THERE IS NO RULE OF HAVING 60% OF WAGES MUST BE CONSIDERED FOR PFCONFRIBUTION. Therefore my dear friends, do not have different opinion on this subject.

However, there was one point which might bother you. Wherever you pay your employees a wage of Rs. 5000/- p.m. (where minimum wages is Rs.4000/-) and you follow this assumed wage pattern,

Basic - Rs.1500

HRA - Rs.1000

Convey - Rs. 500

Special Allowance -Rs.1000

Washing Allowance-Rs.1000

then, excluding the HRA, you must contribute PF for Rs.4000/-. That is what one of the commissioners of PF said and they will view the salary structure like that. They also added that this will be followed for the employees who get wages less than their prescribed limit of Rs.6500/-. Those who get their basic wages more than Rs.6500/-, they are not particular about it.

To add fuel to the fire, there is judgement pronounced by Madhya Pradesh High Court in the case of Surya Roshini Ltd Vs.Employeers' Provident Fund and Another (LLR 568 - June 2011 issue), wherein it was held that allowances viz. Transport Allowance, Attendance incentive, Washing allowance and special allowance paid to employees have to be included in Basic salary and arrive at PF contribution. This will certain go against employer.

In the meanwhile, Labour Law Reporter (Mr. H.L. Kumar, Advocate at Supreme Court) written a letter to PF commissioner at New Delhi questioning Sanctity of the circular issued by PF authorities and insisting them to withdraw the circular. Let's wait and see that is their reaction to this letter.

Hope all these points will give you additional ideas on this.


From India, Madras
Dear All,
Yes I agree to all comments on the basic and its left to the discretion of the employer to fix it as per the grades and the CTC they fix for the position from which these can be back calculated. The key question that still concerns me is that the PF officials are insisting that the basic on which PF is deducted @ 12% should be 60% of the CTC paid to an employee. Is this true or false. What happens when a company pays PF to its employees on a Basic that is less than 60% of the Gross Salary or CTC??? I am keen on some views on this please?
Thanks ,

From India, Chennai

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