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All-in-one HR platform · v2.0
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All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
The wage base on which provident fund contributions are computed: basic plus dearness allowance, subject to the ₹15,000 statutory ceiling where the employer applies it. Getting this base wrong is the usual cause of a PF figure being wrong.
PF wage is the base on which the 12% employee and 12% employer contributions are worked out, and payroll fixes it when the salary structure is designed. Which components go into it decides both the employee's take-home and the employer's cost.
Example: an employee has basic of ₹25,000 within a total salary of ₹50,000. If the company restricts contributions to the ₹15,000 wage ceiling, the employee contribution is ₹1,800. If it contributes on the actual basic, the figure is ₹3,000. Either choice must be applied consistently and stated in the offer.
The common mistake is keeping basic very low and loading allowances to cut PF. Allowances paid uniformly to all employees can be treated as wages, and the Code on Social Security, in force since 21 November 2025, adds back allowances above 50% of total pay to the wage definition. Check the current position before restructuring.
The wage base for provident fund contributions: basic plus dearness allowance.
₹15,000, where the employer applies it.
No. The PF wage is basic plus dearness allowance, while gross also includes other allowances and variable components.
Usually because the PF wage base is wrong.
It is described as applying where the employer applies it.
Yes. Fewer paid days reduce it.
12% from the employee and 12% from the employer.
Basic is its main component, which is why the basic/allowance split is a cost decision.
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