What's the Maximum Provident Fund Deduction Allowed in Employee Salaries?

We want to know what is the maximum PF deduction in any employee's salary.

Hi,

The PF contribution is 12% of basic subject to a maximum of Rs. 6500/- per month. Voluntary higher contributions are also acceptable at the joint request of the member and the employer. A 10% deduction is applicable in cases of industries such as sick industries, establishments engaged in the manufacturing of jute, etc. The complete list is provided in the PF Act.

Regards,
Palak

12% from the employee's side and 12% from the employer's side. Can anyone provide information about Provident Fund (PF) in the IT sector?

Hi,

The PF is deducted on the Basic Salary, which is 12%. The maximum PF deduction is only on 6500, i.e., 780, and the Employer Share gives that amount in the private sector.

Bye,
Praveen
Darjeeling :)

PF is calculated at 12% on basic + DA. There is no compulsion if basic + DA is more than 6500. But if PF is still deducted, then the pension part, i.e., pension, will be calculated only on 6500, and the remaining amount goes to the provident fund part.

For example, if the basic is 10000, then PF will be 1200. The pension part (employer's share) will only be 541, and the remaining part of PF (employer's share) will go to the provident fund.

Note: 12% of the employee and 12% of the employer, which includes 3.67% as PF and 8.33% as pension.

Hi,

The normal practice is to calculate PF as 12% of basic salary. However, this is only the employer's contribution. Another 12% is deducted as the employee's contribution. So the total is 24%.

As far as I know, there is no maximum limit. For example, if an employee has a basic salary of Rs. 50,000 per month, then 12% comes to Rs. 6,000. Hence, the total amount deducted would be Rs. 12,000.

Thanks and Regards,
Karan

12% of the basic salary plus dearness allowance from both sides - from employee as well as from employer.

The employee can have a maximum of 100% PF deductible salary (i.e., Basic Salary + DA) deduction towards the Voluntary Provident Fund. This 100% includes the 12% compulsory contribution from the employee towards PF (i.e., 100% - 12% = 88%).

Only 12% is deducted; the rest of the 12% is given by the company, not deducted. For example, if the basic salary is 1000Rs, the employee pays 120Rs, and the company pays 120Rs.

In case the employee's PF deductible salary is Rs. 1000, the PF contribution would be as follows:

A: By the Employer: 12% = Rs. 120
B: From the Employee: 12% (which is compulsory) = Rs. 120.

If the employee desires, he/she can apply for 100% salary deduction towards PF. This extra contribution is called Voluntary Provident Fund (VPF) and is subject to a maximum of 100% of the PF deductible salary of the employee less the compulsory deduction; i.e., 100% - 12% (compulsory PF) = 88% towards VPF = Rs. 880.

The option of applying for VPF rests with the employee. They can decide whether or not they want to utilize this option and, if yes, up to what percentage. VPF is usually preferred by employees as it is considered an investment under Section 80C of Income Tax.

Hey,

There is no difference from industry to industry in PF. Employers must contribute 12%, while employees can contribute up to 18%.

Our office in Hyderabad opened a new branch in Bangalore with about 50 personnel. Should we have an account in the Bangalore PF office, or can we handle it from Hyderabad itself? Please guide me.

Regards,
Suresh