But in private companies we don’t see dearness allowances, then PF will be calculated on the only basic wage.Įmployers will also contribute to PF, they contribute a total of 13%, including PF admin charges.ĮSI: It will be calculated on gross wage at a rate of 0.75% for employe and 3.25% for employers. PF is always calculated on basic wage + DA (Dearness Allowances). DeductionsĮPF: 12% Provident fund will be deducted if the basic salary of the employee is less than or equal to 15000 Rs. Simple basic wage – total allowance excluding special allowances. Special allowances: The difference between basic wage and the total of all the allowances is considered special allowances. Medial allowances: These allowances are fixed to 1250 Rs. 1600 Rs in urban areas and 800 Rs in rural areas. HRA allowances: House rent allowances should be at 40% of the basic wage in nonmetro cities, and in metro cities, it should be 50%.Ĭonveyance allowances: These are fixed allowances.
In general basic salary should be equal to or more than the minimum wages fixed by the state government of the employer. Basic Salary: Basic salary should be 40% – 60% of gross salary, which will vary from one employer to another employer.
