Confused About Employer PF Contributions? Let's Break Down the 12% for You

Understanding PF Contributions

My question is related to PF contributions. If an employee's basic pay is:

- Basic pay: 34,000
- Then PF contributions to the employee's side are 12% = 4,080
- The employer contribution is divided into two parts: EPF 8.33% and PF 3.67%.
- Total employer-side contribution = 12%.

I cannot understand these two parts of employer-side contributions. Please explain to me in detail where the employer contribution money is deducted.

Thanks,
Anjna

Understanding PF Contributions

PF contribution made by employees is 12% of the basic salary; the entire amount goes to the employees' PF account. On the other hand, the PF contribution made by the employer is also 12%, where 8.33% is allocated to the Employee Pension Fund, and the remaining 3.67% goes to the PF account. Therefore, both the employee and the employer contribute 12% each.

I hope this explanation clarifies the contribution details for you.

Thank you,

Vikram

[QUOTE=vikkybhati07;1513584]

PF Contribution Made by Employees:
12% of basic, the entire amount goes to the employees' PF account.

PF Contribution Made by Employer:
12% i.e., 8.33% goes to the Employee Pension Fund and the remaining 3.67% goes to the PF account.

So, the employee and employer contribute 12% each. Hope you understand.

It should be noted that 8.33% towards EPS is subject to the ceiling of only Rs. 540/-. For employees whose basic + DA is more than 6500, the contribution made by the employer directly goes to the employees' PF account other than the mandatory Rs. 540/- to EPS.

Regards,
Vikram