Understanding Employer PF Contributions: How Much Does Your Employer Really Pay?

Hi,

If the basic salary of someone is more than 6500/- and they opt for PF deduction, what will be the percentage of employer contribution?

The contribution payable by the employer under the Scheme is 12 percent of the wages of an employee. The contribution payable by the employee under the Scheme is equal to the contribution payable by the employer in respect of such employee. [Section 6 & Para 29]

Where the monthly pay of an employee exceeds six thousand five hundred rupees, the contribution payable by him, and in respect of him by the employer, shall not be under an obligation to pay contribution over and above on monthly pay of six thousand five hundred rupees [Para 26A]

Dear, if someone's basic salary is more than Rs 6500/-, then the percentage of contribution will remain 12% from both the employee's and employer's sides. However, you have choices:

1. You can contribute on the full basic amount for both shares.
2. You can contribute the full employee share if they agree to it and contribute Rs 6500 as the employer's share.
3. You can contribute Rs 6500 for both shares.

Thank you,
J. S. Malik

Dear Pooja,

As per your queries, if the basic salary is less than or equal to Rs. 6500/-, then it comes under PF contribution. Employer contribution is 13.61%, which includes administrative charges, and employee contribution is 12%.