PF: 12% of Basic + DA
The employee's Provident Fund contribution is 12% of the PF wage, which is Basic + DA — not gross salary. HRA, conveyance and most other allowances are left out.
Contributions are compulsory on a PF wage of up to ₹15,000 a month. Many employers cap the contribution there, so the employee share is at most ₹1,800. Paying on a higher wage is allowed, but optional.
| Basic + DA earned | PF wage used | Employee PF (12%) |
|---|---|---|
| ₹10,090.91 | ₹10,090.91 | ₹1,211 |
| ₹15,000 | ₹15,000 | ₹1,800 |
| ₹25,000 | ₹15,000 (capped) | ₹1,800 |
The employer also contributes 12%, split between EPF and the pension scheme (EPS). That is paid on top of salary, not deducted from it.
The new labour codes define "wages" more broadly: when allowances make up more than half of total pay, the excess can count towards the wage. If your structure has a small Basic and large allowances, ask your CA how it applies to you.
ESI: 0.75% while gross is ₹21,000 or less
Employees' State Insurance applies to employees whose gross wages are ₹21,000 a month or less. The employee pays 0.75% of gross; the employer pays 3.25% on top. Above ₹21,000, no ESI is deducted.
One nuance: ESI coverage runs in contribution periods (April–September and October–March). Someone covered at the start of a period stays covered until it ends, even after a raise. Check with your CA when a salary crosses the line mid-period.
Calculate on what was earned, not the full month
Both deductions should follow the salary actually earned. If someone has loss of pay, their earned Basic + DA and gross are lower, and so are PF and ESI. Example: Basic + DA ₹12,000, 18.5 paid days out of 22:
- Earned Basic + DA = ₹12,000 × 18.5 ÷ 22 = ₹10,090.91.
- PF = 12% × ₹10,090.91 = ₹1,210.91 → ₹1,211.
- ESI = 0.75% × ₹10,090.91 = ₹75.68 → rounded up to ₹76.
Work out any salary in seconds with the free PF & ESI salary calculator.
How KYE HR does it
Enter Basic and DA once when the employee joins. Each month, paid days come from check-ins and approved leave, and PF and ESI are worked out on what was earned — nobody types them. Filing files (PF ECR, ESI returns) are coming soon; today you get the amounts in the monthly salary report. See how payroll works →