Salary Deductions and Payments: Are They Based on Gross or Basic Salary?

Hi HR Experts, please guide me. Are leave deductions, extra duty payments, and Gazetted holiday payments made from the gross salary or the basic salary? Secondly, is the Provident Fund calculated based on gross salary?

It depends on the definition of gross salary itself. If the gross salary includes only a fixed and pre-decided amount (the amount fixed at the time of the contract of employment), then that would qualify for deduction in case of absence from work (leave without pay), overtime payment, etc. For holidays, there is no additional payment, but when the salary is fixed per month, the holiday pay is included in it.

Regarding deduction and contribution for PF, the same gross salary may be considered subject to a maximum of Rs. 15,000.

Thank you, Madhu. Yes, we pay a fixed gross salary which includes (Basic + House Rent + Medical). What I understand from your conversation is that unpaid leaves, extra duty allowance, and EPF should be paid from the gross. Am I right?

I meant to say that if the HRA and Medical are fixed, then only these would be part of wages. At the same time, if the HRA is paid on actuals subject to certain brackets or limits, and medical (allowance) is "reimbursed" on the production of bills and that also subject to a certain maximum fixed per month or annum, then these would fall out of wages for the purpose of PF, gratuity, bonus, deduction for absence from work, or payment of allowance for overtime work.