Understanding PF Contributions: How Much Do Employees and Employers Really Pay?

Hello,

I want to know from anyone in respect of the actual amount of PF contribution made by the employee under PF Act. We know that the eligibility for contribution of PF by the employee is Rs. 6500/- and the contribution made by both the employee and the employer are 12% and 13.61% respectively.

I may be made clear in response to this post whether the percentage of contribution, i.e., 13.61% made by the employer includes the contribution of 12% by the employee plus 1.61%, or an eligible employee contributes in total 12% + 13.61% = 25.61% from his salary which includes Basic + DA. If possible, it may be clarified with suitable examples the actual contributions made by both the employer and the employee if the salary (Basic + DA) of the employee is Rs. 6000/-.

Thank you and hope to receive any reply from anybody in respect of the above.

[Biswajit Pani]
E-mail Id: bjpani@gmail.com

Hi Biswjit,

There are some basics regarding PF:

1. PF is calculated on only the basic salary, not DA.
2. Employee contribution is 12%.
3. Employer contribution is divided into two parts:
A) 3.67% - which goes directly into the PF account of an employee.
B) 8.33% - which goes to the Family Pension Scheme.

Including the above, the employer has to pay Administrative Charges = 1.10% on the total amount of basic, i.e., 6500 & above.
Then the employer has to pay contributions for the EDLI Scheme = 0.5% and Administrative charges = 0.01% of the amount of total basic considered for the Family Pension Scheme, which does not include the total basic amount above 6500.

So, the total is = 12% (3.67 + 8.33) + 1.10 + 0.5 + 0.01 = 13.61% paid by the employer.

For 6000 basic, PF contribution by the employer = 720 + 66 + 30 + 0.6 = 816.6.

Hi,

I would like to know whether the employee contribution can exceed 12% or not.

Looking forward to your response.

Sathish

The voluntary country contribution rate of employee contribution can exceed 12%, but the employer's contribution will remain at 13.61%.

Dear Anurag,

Since you have mentioned that employee contribution could exceed 12%, please let me know the maximum limit and what would be the amount of Basic that would be shown in the books of accounts.

An employee can contribute a maximum of another 12%, i.e., 12% mandatory and another 12% of basic VPF. Hope it helps!

Employer Contribution Breakdown

The employer contribution is divided into two parts:

A) 3.67% - which goes to the Family Pension Scheme.

B) 8.33% - which goes directly into the PF account of an employee.

Please let me know if you need any further assistance or clarification.

Regards

The maximum limit of VPF is 20% from the employee's side, but the contribution from the employer's side remains the same at 13.61%.

Regards,
Arpit Sharma

Dear All,

Please refer to the below-mentioned calculations:

- A/C 1 (Provident Fund Employee's Contribution @ 12%)
- A/C 1 (Provident Fund Employer's contribution @ 3.67%)
- A/C 2 (Administration Charges @ 0.85% or (minimum) Rs.500/- whichever is more)
- A/C 10 (Pension Fund Employer's Contribution @ 8.33%)
- A/C 21 (Employee's Deposit Linked Insurance Employer's Contribution @ 0.50%)
- A/C 22 (Administration Charges @ 0.01% or (minimum) Rs.200/- whichever is more)

Thank you.

Hello,

If my basic salary is 8000 and HRA is 5500, then what should be my PF deduction and employer contribution per month? Please help.

Considering BASIC + DA = Rs.8000.00
Employee's Contribution towards A/C 1 is Rs.8000 X 12% = Rs.960.00
Employer's Contribution towards A/C 1 is Rs.8000 X 3.67%= Rs. 293.60
Towards A/C 2 is Rs.8000 X 0.85%- Rs. 68.00
Towards A/C 10 is Rs. 8000 X 8.33%- Rs. 666.40
Towards A/C 21 is Rs. 8000 X 0.5%- Rs. 40.00
Towards A/C 22 is Rs. 8000 X 0.01%- Rs. 0.80
Moreover A/C 2 and 22 , the minimum balance has to be taken care by the Employer.

Hi, can an employer restrict/cap its PF contribution to Rs. 1800 per month (Rs. 1800 per month from the employee + Rs. 1800 per month by the employer) even though the basic pay of the employee is significantly high (over 1 lakh per month) and the employee is also contributing towards Voluntary PF.

PF Contribution Amendments

As per the latest amendment, the PF admin charges have been changed. Please follow this:

- A/c 1 EE (Employee Contribution) - 12%
- A/c 1 ER (Employer Contribution) - 3.67%
- A/c 2 (Administrative charges) - 0.65% with a minimum of Rs. 500
- A/c 10 (Pension Fund) - 8.33%
- A/c 21 (EDLI) - 0.5%
- A/c 22 (Administrative charges for EDLI) - 0%

Total - 13.15% with a minimum of Rs. 500 for A/c 2

EDLI Admin Charges (A/C # 22) for both Functional & Non-Functional Establishments W.E.F 01-04-2017 - No Sum is Payable/Nil (till 31-03-2017 @ 0.01% on EDLI Wages or Rs 200/- whichever is higher).

Regards

Hi Vivek,

Considering your Voluntary PF, the percentage of your contribution can vary from 12% to 88%. If you fall under this slab and are looking at your basic and DA, yes, you can restrict your PF to 1800/-.