PF wages, the ceiling and the actual-or-capped decision

Provident Fund contributions are calculated on PF wages — broadly basic pay plus dearness allowance and certain other components. Both the employee and the employer contribute 12% of that amount.

The ceiling

The statutory wage ceiling is ₹15,000 a month. Employers may limit contributions to 12% of ₹15,000 even when PF wages are higher, or contribute on the full, actual wages. Many companies use the ceiling for most staff and actual wages for some grades.

Actual or ceiling, per employee

Ceiling: the contribution is 12% of the lower of PF wages and ₹15,000.
Actual: the contribution is 12% of full PF wages, with no cap.
Whichever you pick, apply it consistently and record it — switching back and forth creates reconciliation work.

Part of the employer's 12% goes to the Employees' Pension Scheme and the rest to the employee's PF account. EDLI and administration charges are paid on top.

In PeopleOS

Grades decide whether PF applies at all, and each employee carries a contribution type — actual or ceiling. The payroll run uses it automatically, and the salary simulator shows the effect before you save.

Always confirm current rates and ceilings against the latest EPFO notifications before changing payroll settings.

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