Understanding PF Admin Charges: What Part of Wages Should They Be Based On?

Clarification Needed on PF Administration Charges

I have the following doubt: PF administration charges shall be calculated at 1.10% of wages. I am not certain about the definition of wages. Please tell me on what component of wages it has to be calculated—i.e., Gross pay excluding HRA or Gross pay limited to Rs. 6500/-. Can someone help me to resolve my doubt? Please provide a reference for the present G.O. or Amendment regarding the EPF Act.

Regards,

Hi Sreenandhini, please find the answers as you required:

- PF is calculated on (basic + DA) and it is covered by the Central Government.
- PF is a kind of benefit and savings for the employees and a part of deduction as well.
- Basic means the minimum wages, and wages vary from state to state. The parameters on which wages vary will be according to the cost of living.
- 6500 is the limit of PF.
- DA = Dearness Allowance will vary according to the Central Govt and state Govt. The changing ratio will be different for State and Central Govt.
- Employee Contribution towards PF Ee = 12% Employer Contribution Er = 12% + 1.61% (administration Charges)
- If B + DA = 650 then Ee = 12%, Er = 12% + 1.61% Ee = Rs 780, Er = Rs 780 = 1.61% * 6500 = Rs. 104.65

Calculation

A/C 1 (Employee Provident Fund Account, EPF), Ee = 12%, Er = 3.67% Ee = Rs 780, Er = Rs 238.55

A/C 10 (Employee Pension Fund) Er = 8.33% Er = 8.33 * 6500/100 = Rs. 541.45

A/C 2 (Administration Charges), 1.1% 1.1% * 6500 = Rs. 71.50

A/C 21 (Employee Developed Linked Insurance Charges), 0.5% 0.5% * 6500 = Rs. 32.50

A/C 22 (EDLIC), 0.01% 0.01% * 6500 = Rs 0.65

Total Administration Charges = Addition of all 1.1% + 0.5% + 0.01% i.e. Rs (71.50 + 32.50 + 0.65) = Rs 104.50

I hope now you will be able to understand your query in a better way.

Regards, Aashi

Hi aaashi, please try to come on chat. I want to ask in detail about PF. We are paying PF administration charges on the total gross wages earned by the employee. Are we doing it right or wrong? 

I have a doubt regarding the contribution of PF from the employer's side. As I understand it, there are three ways of contribution:

1. PF
2. Family Pension Scheme
3. Deposit Linked Insurance Fund

My doubt is whether the employer has to choose their contribution from the above three options, or if they have to contribute a certain percentage to all three from the total 12%.

For example, is the employer's contribution for the Pension Fund 8.33% + 3.67% for the Pension Fund?

Please clarify my doubt.

Regards,
Kalyani

Dear Sir,

For the past four years, I have not created the challan for ESIC and PF as work has stopped. Now, I want to contribute to the employees. What should I do to reopen the PF and ESIC accounts? Also, please suggest what charges I will need to pay for PF for the past four years.

Thank you.

Pf challan calculation with all admin charges. Find Excel sheet here; it will be helpful for you.

Hello, Sir.

My minimum salary is 11069 INR. EPF share is 13.67% - 1478. ESI is 4.75% - 526. Administrative charges are 6.96% - 910. The total is 13084. However, the cash in hand is 9547. I am having trouble understanding these administrative charges and on what basis should I deduct this amount. What is being deducted?

Thank you.

Dear HR friends,

I am Sridhar and have been working in a small organization. I would like to inquire about the clarity of PF calculation for both employees and employers, specifically:
1. Calculation of administrative charges.
2. Calculation of EDLI and its purposes.
3. Recent amendments in PF and ESI applicable to all HR professionals.

Regards,
Sridhar