Understanding PF Deductions: How Are Employer and Employee Contributions Calculated?

I want to know regarding PF deductions, on what basis the PF will be deducted. What is the percentage of employer and employee contribution? Whether both are to be deducted from the salary or not. Can anyone help me out with this? I have recently entered into the HR field, and I am getting confused while calculating salaries. I want to learn complete details regarding PF.

Provident Fund Scheme:

You will be eligible to become a member of the Provident Fund Scheme immediately upon joining, as per the rules in force from time to time. The company contribution under this scheme is fixed at 12% of your basic salary with a matching contribution from you. You will be required to submit necessary enrollment/transfer forms to the HR department immediately upon your joining.

Dear HR,

Good Morning! :-P!!!

Replies to your queries are as follows:

1. PF is calculated on Basic Salary.
2. Contribution is 12% from both Employee & Employer sides.
3. Employee Contribution will be deducted from the Employee's Salary, and Employer contribution shall be borne by the Employer.
4. PF is deposited to the PF department by Challans on a monthly basis through the Bank.

If you want to know anything else, you can stay in touch with me.

Hello, Mr. Kapil.

In this, how much percentage of employer money is divided for both PF and pension scheme? Can this pension fund be transferred to another organization when the employee resigns? Is there no possibility to receive the pension scheme money when an employee resigns?

In the Cost to Company (CTC) concept, both employer and employee Provident Fund contributions are deducted from the employee's salary.

Good Afternoon,

In the gross salary, only the employee's contribution is deducted from their salary. The employer's contribution shall be borne by the employer. Provident fund is calculated at 12% of the basic salary.

Regards,
Reshma Birmole

1. PF is calculated on your Basic Salary.
2. Contribution is 12% from both Employee & Employer sides.
3. Employee Contribution will be deducted from the Employee's Salary, and Employer contribution shall be borne by the Employer.
4. PF is deposited to the PF department by Challans on a monthly basis through the bank.

Employee contribution towards PF is 12% on basic + DA pay. Employer contribution is also 12% of basic + DA, but it will be divided into two aspects. 3.67% will go towards PF, and 8.33% will go towards the pension fund. Only the employee's contribution will be deducted from the salary.

And as far as when one leaves the organization is concerned, Form 10C can be availed to withdraw pension. Form 19 is used to withdraw the provident fund, and Form 13 can be used to transfer the PF from the previous company to the current company.

An employee who wants to withdraw or transfer his or her PF or pension should submit the form after two months of resigning from the organization. It will take 45 days for the PF office to process their PF and Pension amount. However, you have to complete a minimum period of six months in the organization to withdraw the pension amount.

1. PF is calculated on your Basic Salary.
2. Contribution is 12% from both Employee & Employer sides.
3. Employee Contribution will be deducted from the Employee's Salary, and the Employer's contribution shall be borne by the Employer.
4. PF is deposited to the PF department by Challans on a monthly basis through the bank.

Dear Sir,

As per the PF Act:
1. PF is deducted (12%) from the basic salary of the Employee.
2. The Principal Employer (Company) adds 12% of the basic salary. The Company Contribution (12%) is divided into two parts. Many companies include this contribution in the overall CTC.
2.1. 8.33% is allocated to EPS (Employee Pension Scheme).
2.2. 3.67% is allocated to EPF (Employee Provident Fund).

Note: 8.33% of the basic salary, subject to a maximum of Rs. 541/- per month, is diverted from the Company's contribution to the EPS 1995.

The total contribution of PF is as follows for your reference:

PAYMENT OF CONTRIBUTION
- A/c 1 EPF: Employers 12% + Employees 3.67% = 15.67%
- A/c 2 EPF ADMIN CHARGES: 1.10%
- A/c 10 EPS: Employees 8.33%
- A/c 21 EDLI: 0.50%
- A/c 22 EDLI ADMIN CHARGES: 0.01%

TOTAL = 25.61%

Regards,
Kalpesh Patel
Labour Law Consultant
Gujarat

Hi,

We deduct only employees' contribution, i.e., 12%, and the employer contribution is 12%. Out of 12%, 8.33% contribution is towards the pension, and the remaining is for PF.

What is the difference between provident fund and pension fund? And who is responsible for paying the pension fund - the employee or the employer?

A provident fund is a fund created by the employer to which both the employer and employee contribute, typically used to provide a lump sum payout upon retirement. On the other hand, a pension fund is usually solely funded by the employer and provides regular payments to the employee after retirement.

In the case of a pension fund, the employer is responsible for contributing to the fund, while the employee may also contribute to a provident fund alongside the employer. The responsibility for making contributions to the pension fund lies primarily with the employer.

Maximum limit of PF deduction is 6500/ Basic+DA salary. From the employee's side, 12% (A/c-1) is deducted. From the employer's side, 12% is divided into two parts:
i. 3.67% goes to PF office (A/c-1), totaling in A/c-1 (15.67%).
ii. 8.33% goes to PF office (A/c-10).
Additionally, there is a 1.10% admin charge (A/c-2), a 0.50% EDLI charge (A/c-21), and a 0.01% inspection charge (A/c-22). The total PF contribution from the employer/employee side is 25.61%. PF challan should be submitted to S.B.I Bank before the 15th of the month.

Thanks & Regards,
Arun Gahelot
HR Executive

PF is calculated on an employee's basic salary divided by (basic + FDA). The contribution is 12% from both employee and employer, collected compulsorily. Employee contribution is based on the employee's salary, while the employer's contribution is (8.33% - EPS) and (3.67% - EPF). The contributions are deposited in the local PF office by challans on a monthly basis.

Dear Iqbal,

Total PF is 15.67% (12% employee side and 3.67% employer side). Pension fund is 8.33%, and it shall be deducted from the employer side. Pension shall be paid at the time of Resignation, Death Case, or Retirement.

Note:
1. The minimum service shall be 10 years to be eligible for the pension fund.
2. In case an employee attains the age of 58 years.

Thanks & Regards,
Arun Gahelot
HR Executive

Hi,

Please find the attachments for PF. I have made a mistake in one slide regarding the contribution. Please correct it. It should be 12% on the employee PF account for the employer contribution. The breakdown is as follows:

- 13.61% is divided as:
- 12% of the basic paid towards the employer PF contribution is split into two parts:
a) 8.33% to the employer pension account
b) 3.67% to the employer PF contribution account
- 1.61% goes towards administrative charges as follows:
a) 1.1% of the basic to PF admin charges
b) 0.5% to EDLI charges
c) 0.01% to EDLI admin charges

Regards,
Divya

Dear HR Professional,

Employee continues to contribute to PF.

PF will be deducted from the employee based on his basic salary at 12%.

Employer contributes to the employee's PF. The PF contribution to the employee from your company's side is on his basic salary @13.61, and it will be considered part of the employee's total CTC. You only have to deduct the employee's PF from his salary. The deduction for the employee will be as follows:

Basic + HRA + Con + Other = Gross pay
PF - ESIC - PT - Other deductions/Advances = Net pay

Regards,
Mohammed,
HR Assistant Manager

"I want to know regarding PF deductions, on what basis will the PF be deducted? What is the percentage of Employer & employee contributions? Do both need to be deducted from the salary or not? Can anyone help me with this? I have recently entered the HR field and am getting confused while calculating salaries. I want to learn complete details regarding PF."

Dear HR,
Good Afternoon :)!!!
1. PF Deducted (12%) from basic salary of the Employee
2. Principal Employer (Company) Add 12% of basic salary. Company Contribution (12%) devided in two Parts. Many comapanies saw this contribution in overall CTC.
2.1 8.33% in EPS (Emp Pension Scheme)
2.2 3.67% in EPF (Emp Provident Fund)
Note: 8.33% of basic salary subject to maximum of rs.541/- per month is deviated from Compamy's contribution to the EPS 1995.
Total contribution of pf is following for your Knowledge.
PAYMENT OF CONTRIBUTION
A/c – 1 EPF EMPLOYERS 12% + EMPLOYEES 3.67% = 15.67 %
A/c – 2 EPF ADMIN CHARGES 1.10%
A/c – 10 EPS EMPLOYEES 8.33 %
A/c – 21 EDLI 0.50 %
A/c – 22 EDLI ADMIN CHARGES 0.01%
TOTAL = 25.61%
Yes, you can transfer your PF to other Organisation whenever you resigns.