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

Contributions Towards PF from Employees and Employers

What are the contributions towards PF from employees and employers? Please let me know as early as possible.

Regards

Contribution Details for PF from Employees and Employers

Please find the information below:

From the employees, the share is 12% of the basic salary.

Employer's contribution: 12% of the basic salary to be deposited as follows:
- 8.33% to be deposited in Pension Fund A/C No. 10
- The balance, i.e., 3.67%, to be deposited in Provident Fund A/C No. 01 along with the employees' share of 12%.

Thanks & Regards,
Vani

Contributions Towards PF from Employees and Employers

PF is deducted from the basic salary + DA. Its contribution is 12% employee's share and 12% employer's share. The total wages limit is ₹6500 per month. The employer's share (12%) is divided into two streams: 3.67% and 8.33%.

1. EPF - 3.67% (goes to PF share)
2. EPS - 8.33% (goes to pension share), but the EPS amount cannot exceed ₹541.00.

Other charges amount to 1.61% and are divided into three streams:

1. Admin Charges: 1.10%
2. EDLI: 0.50%
3. EDLI Admin Charges: 0.01%

There are five accounts in the PF challan:

1. A/C No(1) - 12% employee's share + 3.67% employer share
2. Account No(2) - 1.10% admin charges
3. A/C No(10) - 8.33% employer pension share
4. A/C No(21) - 0.50% EDLI charges
5. A/C No(22) - 0.01% EDLI admin charges

I hope this information is helpful. Let me know if you need further clarification.

Best regards,

[QUOTE=MADAN MOHAN VERMA;1357977] Dear Vighnesh, PF is deducted on the basic salary + DA. Its contribution is 12% employee's share and 12% employer's share.

Total Wages Limit is ₹6,500/- per month

Employer share (12%) is divided into two streams: 3.67% and 8.33%.
1. EPF - 3.67% (goes to PF share)
2. EPS - 8.33% (goes to pension share), but EPS amount cannot be more than ₹541.00/-

Other Charges are 1.61% and They are Divided into Three Streams
1. Admin Charges: 1.10%
2. EDLI: 0.50%
3. EDLI Admin Charges: 0.01%

There are Five Accounts in PF Challan
1. A/C No(1) - 12% Employee's Share + 3.67% Employer Share
2. Account No(2) - 1.10% Admin Charges
3. A/C No(10) - 8.33% Employer Pension Share
4. A/C No(21) - 0.50% EDLI Charges
5. A/C No(22) - 0.01% EDLI Admin Charges

Employer contribution is not merely 3.67%. Out of the 12% of employer contribution, 8.33% subject to a ceiling of ₹541 p.m will go to EPS, and the rest of the amount to PF. For example: If the employer contributes 12% on a salary of ₹10,000, then the contribution will be ₹1,200. After adjusting ₹541 to EPS, ₹659 will be credited to the individual PF account along with the employee contribution.

In the case of exempted PF Trust and in lieu of EDLI, no admin charges are applicable. Instead, 0.18% and 0.05%, respectively, have to be paid towards inspection charges.

Abbas P.S.

No doubt the PF contribution has to be paid on "Basic Wages, Dearness Allowance, Value of any Food Concession, and on retaining allowance if any as per Section 6 of the EPF & MP Act, 1952. But under Section 2 (b) of the Act, the "basic wages" were defined as all emoluments which are earned by an employee while on duty or on leave but does not include house rent allowance, overtime allowance, bonus, commission, or any other similar allowance only. By showing this definition of Basic Wages, the PF Inspectors in some areas are insisting payment contributions on Conveyance Allowance, Washing Allowance, Special Allowance, and Shift allowance also. At this juncture, it is putting the employers in an embarrassing position, and they were compelled to manage the authorities. Hence, it required a clear-cut clarification from the PF Department. Can anyone give their opinion on these contradictory definitions?

With regards,
Sanagapalli