Dy Lab Comm, Pb (retd), Consultant And Qualified
Asst Manager-hr
Hr Consultant
Manager- Hr & Ir
Sabapathy Siva Sankar
Asst. Manager - Admin & Hr
+7 Others

Hi, as per our current salary structure basic/hra/cca/conveyance/other allowances are the salary components and PF 12% is deducted only from basic salary. As per the understanding PF is to be deducted fro basic and DA whereas we don't have DA component, it is deducted from only basic. Basic salary as per the structure is approx 35-40% of total earning.
Recently we had inspection by PF office and raised a query why we are deducting PF only from basic and not from other allowances.
In this regards the following information could help in dealing with PF office, request to please provide your inputs.
1) Is there any stipulated method / % of total earning etc for Basic salary calculation
2) Is there any rule that PF to be deducted from all salary components and not only from basic and DA
3) is there any ruling etc to substantiate claim of PF deduction applicable only from basic and DA etc
Kindly help.
any payout to employee which is regular in nature, Excluding HRA and medical is considered eligible for EPF,
My gross salary is 25000 what is my basic salary and can i. Will eligible for pf deduction
how can a third party make analyse the salary structure of any company or it's employees? it depends on the company polilcy, department can ask for the rules to be complied only.
if you have any specific query on the issue, post here to get reply
Sir The easy way to calculate PF would be Consider 70% gross as eligibility. Example: If 10000 Rupees is the salary 70% would be 7000 Rupees. Calculate 12% on 7000 Rupees only.
PF is deducted not only basic salary which includes of other components like /food/conveyance/other allowances except HRA up to maximum of 15000/- as per the PF rules. PF inspection has been done in our company and PF authority has directed us to follow the same rule which has been following thereafter.
Satya Nagaboyana

Please refer to <> to get a comprehensive idea about Employees Provident Fund. The spirit of this scheme also must be applicable to any other PF scheme the company may choose to subscribe to.

The following extract from the webpage may answer the question:

"43. WC.7: What is the amount of wages to be considered for PF contributions?

PF Contribution is payable on all emoluments payable in cash to an employee during the month excluding the following:- (i) House Rent Allowance (ii) Over Time Allowance (iii) Bonus (iv) Commission or any other similar allowance; and (v) Any presents made by the employer"

You can avoid a lot of headaches with PF inspection, if you keep as many employees as possible above the PF ceiling of

Rs 15000/-. The agenda of the government is to turn PF into some kind of social security scheme by somehow including all citizen into its ambit. We cant fight the system too long. The best option is to include employer contribution into CTC. Also HR managers tend to help employees get income tax exemptions by showing as much HRA as possible in the salary breakup. That may help the employee, but not the employer. Let employees do their own tax planning.
Hi, thanks to all for the inputs on the above discussion. It was to re-confirm how it can be followed in a better way with less employer liability. Thanks a lot.
Dear Sir,
25000/- is gross or CTC
Basic ratio is 40-60%
What is ratio of your company, if your company basic ratio is 40% than =25000*40%= 10,000/-
if any query, you can call any time.
Suresh Sharma
Dear All
Our salary structure contain the following
basic 40% of CTC
DA 10% of Basic
HRA 40% of Basic
Medical 1500 PM
Conveyance 1600 PM
Education Allowance 200 PM
And rest in other Allowance
Pls clarify on which above stated component the PF would be chargable
Regarding the payment of the PF contribution on the allowance. Madras High court and Madras High court have given judgement that,except HRA all the other allowances shall be treated as part of Basic pay and shall be deducted PF. Review petitions are filed in the Supreme Cout. At present, these case are pending in the Supreme Court.
Hence, the SC decides the case we need not to pay the PF on the allowances. If any PF inspection authorities ask to pay on allowance. U can cite these judgement pending in the Supreme Court.
T. Mahendar Reddy
As far as the Basic Pay is reasonable percentage to the total salary, PF authorities cannot insist, because there is no specific mention in the Act or in PF circular about the percentage.
T.Mahendar Reddy
Respected All, I have a query regarding Welfare Officer(As per AP Factories Act) Revised salary structure copy if any available pl send its very urgent
Hello All,
I have newly joined in one of the organization where we pay on consolidated scale to our employee. I want to reconfirm about my understanding on change in PF celing wage of 15000/- per month.
For a gross of 12000 per month we have the following structure :
Basic : 7800, HRA: 1800, CLA:1200, TA:1200. We are currently deducting pf of amount 936 (7800*12%)
Whereas to meet the PF celing wage requirement i am suggesting to make following structure to meet the requirement.
Basic : 12000 so that PF will be 1440 (12%*12000). Pl confirm is this correct.
The said proposal was in discussion with my PF consultant.
Hello dear all
Whatever component of wage/salary you keep, the PF deduction cannot be on less than the amount of prevailing minimum wages as fixed by the appropriate government. Here is a circular of the PF department.
Jacob Pratap
Deputy Labour Commissioner, Punjab (Retired)
Consultant (Labour Laws) &
Qualified External Member of ICC for Sexual Harassment........ Act, 2013

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File Type: pdf PF Contribution on not less than Minimum Wage.pdf (684.1 KB, 900 views)

Is there any minimum limit of Basic salary of PF contribution?I mean Suppose an employee is getting Rs.1500 as basic salary,is he eligible to be deducted for PF???
Dear Jacop Pratap,
Agree, Circular is attached by you is older, Here, I am attaching circular which clearly states that the circular dated:23/05/2011 Splitting Minimum wages for the purpose of PF contribution not permissible KEPT IN ABEYANCE.
Circular attached is dated 02/12/2011 Which says that above circular dated :23/05/2011 is KEPT IN ABEYANCE.
If I am wrong somewhere please advise.
Nilesh Dhameliya
Manager HR

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File Type: pdf Splitting of minimum wages for PF in abeyance (1).pdf (103.1 KB, 305 views)

At the outset, the question whether the employer can split the minimum wages and whether pf contribution is payable on all allowances excluding HRA is yet to be decided by the Hon'ble Supreme Court.
Please refer to the attached note on the above issue.
The pending cases on the subject issue will come up for hearing during this month
You are liable to deduct PF contribution on the basis of current wage ceiling of Rs.15,000/- (Either Basic or Basic + DA as case may be)
Your query Suppose an employee is getting Rs.1500 as basic salary,is he eligible to be deducted for PF - YES
S. G. Management Services
(PAN INDIA Consultant – Labour Law Compliance,
PF, ESI, P Tax, Benefit Management &

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File Type: doc NOTE ON PF TO BE CALCULATED ON ALL ALLOWANCES.doc (36.5 KB, 504 views)

HI Everyone!
We are planning to restructure the salary.
If employee cross gross 15000,Can his basic should be 15000 or it can be split into other components and deducted only for 15000 for pf?
Plz clear my query.
Hi Lalitha
You have to add components as
baisc is 50% of gross salary
hra is 50%of basic(in metro cities) and 40% of basic (in other states)
These two components are mandatory. You have to structure accordingly and if required you can add other allowance to balance the salary.
Employees’ Provident Fund is a small saving scheme that is offered to Indian workers as well as international workers through the EPFO of India. The scheme allows accumulation of funds as well as accrual of interest on the accumulated funds. The funds thus collected are made of contributions partly from employees and partly from their employers.
Contributions from employees as well as employers add to the EPF. However, unlike what is commonly thought to be, the entire portion of contribution from an employer doesn’t go exclusively towards the Employees Provident Fund.
Division of funds
1. 12% of Basic Salary and standard allowance of Employee goes directly towards Employees’ Provident Fund.
2. 13% of Basic Salary and standard allowance of Employer is divided as follows –
o 3.67% of contribution towards Employees’ Provident Fund
o 0.5% of contribution towards EPF Administration Charges
o 0.5% of contribution towards EDLI Administration Charges
o 8.33% of contribution towards Employees’ Pension Scheme
Minimum salary limits: Employees with monthly salaries less than or equal to INR 15,000 now have to contribute mandatory towards EPF. PF amount is calculated for the basic amount. PF will be calculated as 12% of the basic.
Provident Fund Calculator
Basic Pay
25000 /Month
PF Contribution
12% of 15,000: ₹1,800.00
13% of 15,000: ₹1,950.00
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