At the first instance let us read the definition of ‘basic wage’ provided under the EPF, Act, 1952, which is pivotal to calculate the contributions as specified under sec.6 of the Act:
Section 2 (b) of the Act defines : "Basic wages" means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the term of the contract of employment and which are paid or payable in cash to him, but does not include-
(i) the cash value of any food concession;
(ii) any dearness allowance (that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living)-house rent allowances, overtime alliances, bonus, commission or any other similar allowance payable to the employee in respect of his employment or work done, in such employment;
