Understanding PF Components: Which Salary Parts Are Covered Under the Provident Fund Act?

Hi,

Could anyone provide details about PF components? I mean, what salary components attract PF under the Employees Provident Fund Act?

It's urgent.

Thanks,
spr

Hi,

PF is only deducted from the Basic Salary, and the contribution is 12% of the basic salary from the employer's and employee's side.

Hi,

PF is deducted at 12% of Basic+DA/Basic only if DA is not included. This contribution comes from both employees and employers.

Out of the 12% contributed by the employer, 8.33% goes to the Pension fund, while the remaining 3.67% goes to the PF fund itself.

I hope this clarifies things for you.

Regards,
Amit Seth

It's 24% of the basic salary (Employer contribution (12%) + Employee contribution (12%)). Once the basic crosses Rs. 6500/- per month, the contribution towards PF may change.

Pratibha

The PF Act came into effect in the year 1952. The main objective of the PF Act is to assist the employee after retirement.

- Employee contribution is 12%.
- Employer contribution is 12%.

In total, 24% goes towards the fund. Out of this, 8.33% is allocated to pension, and the remaining 15.87% is designated for family pension.

The following are the components of PF: Basics + DA.

Hi Shariff,

This is Shariff. I completed my MHRM, and now I am working with a consultant. Is it good for me? Can anybody help me decide which one is better for HR? Can anybody suggest?

With regards,
Shariff

Hi,

Employees contribute 12% of their basic salary, while the employer contributes 13.61% of the basic salary, with 8.33% being the maximum limit on a basic salary of 6500 for the pension fund, 3.67% for PF, and the rest for administrative charges, inspection charges, and insurance charges.

Regards,
Deepak

Hi Spr, you must be thankful to so many friends for their input on your query. But let me add one more point: P.F should be calculated on Basic salary + D.A + Cash equivalent of food concession. The rest is perfectly mentioned by other friends above.

Employee's share goes to EPF - 12%
Employer's Share:
- Goes to EPF - 3.67%
- Goes to Pension Fund (FPF) - 8.33%
- Administration charges to be borne by Employer - 1.1%
- Employees' Deposit Linked Insurance (EDLI) - 0.5%
- Adm. charges to EDLI - 0.01%
TOTAL - 13.61%

Hope it will provide you with a little help. Take care.

JayPee

Hi,

Thank you to everybody who has replied to my query. Actually, some people say that PF will be calculated on Basic + DA + Special pay + Other allowances + Food Allowance. Some of the cases booked against 7A enquiry state that special pay is also included in PF calculation. Can anybody clarify more in this regard?

Thank you,
Spr

Dear Sir,

If you can refer to the definition of salary in the Minimum Wages Act, it includes basic pay, dearness allowance (DA), which can be a special allowance in some companies (adjusted biannually based on the price index), personal pay allowance, and allowances as part of the salary. This excludes allowances given to meet daily expenses and excludes House Rent Allowance (HRA). If we have an allowance by the name of personal allowance, it can also be included in the definition of basic salary. On this basic salary, Provident Fund (PF) is applicable.

I hope your doubt is clear now.

Thanks & Regards,
Amal Shere

PF contribution from employees' side is 12% of the Basic Salary + Dearness Allowance (if any). The Employer will also contribute 12% for the same. Out of the employer share, 8.33% will go into EPS (pension fund), and 3.67% will go into the PF account. Therefore, in the PF account of an employee, the total contribution would be 12% + 3.67% = 15.67%.