Introduction
In June 2016, the Government of India issued clarifications regarding Provident Fund (PF) contributions, highlighting that allowances that are universally, ordinarily, and necessarily paid to employees should be treated as part of basic wages.
This change aimed to prevent employers from structuring salaries to artificially reduce PF liability.
In line with these changes, organizations using uKnowva HRMS must ensure their PF plugin configuration reflects this compliance.
This article explains how to upgrade and configure the Provident Fund plugin within uKnowva HRMS according to the 2016 mandate.
For further reference, you can visit the article here.
Step 1: Access the Provident Fund Plugin in uKnowva HRMS
To begin with, navigate to the top-right corner of your screen and click on your profile picture.
From the drop-down list, select uKnowva Configuration. This action will redirect you to the configuration dashboard.
On the left-hand side panel, click on Plugin Manager to open the plugin management section.
Once inside, scroll through the list or use the search bar to find the Provident Fund Calculator plugin.
Click on it, and a pop-up window will appear for configuring the plugin settings.
Step 2: Configure the Plugin as per the June 2016 Guidelines
In the configuration pop-up, locate the field labeled Basic Head Title.
Here, you need to enter the salary component that represents the basic pay in your payroll structure.
It’s important that this matches the exact title used in your salary setup to ensure seamless calculation.
Next, enter the Basic Max Limit Amount. This refers to the upper threshold of the basic salary amount on which PF should be calculated.
Typically, this value is ₹15,000, but it can be modified based on your organization’s PF policy.
Under the Provident Fund % section, enter the percentage applicable for PF contribution. Generally, the employee’s share is 12%, and the employer’s share is also 12%.
Enter these values accordingly in the Employer’s Contribution field.
You will also find the field labeled PF Threshold Amount – Max Amount to Be Deducted as PF.
This defines the cap for PF deduction. For instance, if you specify ₹15,000 here, PF will be calculated only up to this amount, even if the employee’s salary exceeds it.
Then comes the logic that aligns with the 2016 clarification. If the employee’s basic salary is greater than or equal to the threshold amount (e.g., ₹15,000), PF will be calculated on the basic component alone.
However, if the basic salary is less than the threshold, then additional components like special allowances, which are considered part of ordinary wages, should be included in the PF base.
The plugin uses this logic to determine the PF base amount.
After you have configured all the relevant settings, review your entries carefully and click the Save button to apply the changes.
Conclusion
That’s it!
You’ve now successfully upgraded and configured the Provident Fund plugin in uKnowva HRMS as per the June 2016 rules.
By following this process, you ensure that PF contributions are calculated on all applicable components, in line with government guidelines and compliance expectations.
This setup not only protects employees’ social security benefits but also keeps your payroll legally sound and audit-ready.
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