Confused About PF Slip Calculations? Let's Figure It Out Together!

Hi all, my name is Srikanth, and I work as a Jr. HR Executive in a security company in Hyderabad. I'm really confused about the calculations on the PF slip. Many of our colleagues from other departments frequently ask me about these calculations, but I'm unable to explain them. Can anyone please help me out with all these calculations?

Thank you.

I am working at Group 4 Security Services (G4S). Concerning calculations, I am not familiar with all the columns in the PF slip, such as EMP, employer contributions, opening and closing balance, ceiling limit for PF, etc. Please let me know if you have this information.

Thanks and Regards,
Srikanth

Understanding PF Calculations

Op. Bal. means the last year's PF amount in the PF department. The employee amount is 12%, and the employer amount is 3.67% (the balance of 8.33% goes to the pension account).

Clos. Bal. Explanation

"Clos. Bal." means the last year's PF amount plus the current year's PF amount equals the closing balance, which includes only the employee's 12% and the employer's 3.67% (above 8.33%). If an employee asks you how much PF amount is for them, you can tell them it's only 24% (12% + 3.67% + 8.33%).

Example Calculation

- 12% amount is Rs. 100 (Employee Contribution)
- 3.67% amount is Rs. 31 (Employer Contribution)
- 8.33% amount is Rs. 69 (Employer Contribution) (Pension amount)

The total amount is Rs. 200/- that the person will receive after PF withdrawals before completing 10 years of service (if incomplete service).

Regards,
JAY

Hey Srikanth and Jay,

In short, you have already seen your bank passbook, is it not? PF A/c. statement is also nothing more than that. Except that, there are compulsory deposits from you as well as from your company as per the PF Act.

Imagine that your salary is Rs. 5000/- p.m. On that, you have to put 12% in your PF A/c and a matching 12% from your company. These deposits earn interest, which is added periodically, and the monthly closing balance is indicated. When you are eligible and want to take it, you can avail of a loan (refundable monthly-EMI, which is added back to your account) and withdraw (non-refundable) which is deducted. For every such transaction, the closing balance is indicated. What is the confusion in this? To be precise, first of all, understand your bank passbook and then take up the PF A/c. statement next.

Kumar.s.

You need not calculate the amount on the P.F. slip. You have to submit annual Returns Form-6A and 3A every year. The P.F. authorities will issue the P.F. slip from their end. In the P.F. slip, it will be available as Previous Balance + Interest accrued = total amount of Balance + Current year amount - P.F. advances taken = Closing Balance amount. (Please see the slip.)

Regards,
D. Gurumurthy
HR/IR Consultant

Please note that the PF slips only show the EPF amount, i.e., 12% employee's share + 3.67% (different amount) employer's share, and the remaining 8.33%, i.e., pension fund (employer's share), is not shown in the slip.

Hope this information helps you.

Regards,

Also, note that the 12% + 3.67% is the amount on which interest is calculated, and the rest, i.e., the pension fund not shown in the slip, remains the same as deposited and can be withdrawn along with EPF after resignation by submitting Form 19 and 10C.

Regards,

I think your question is how to understand a PF slip received from the PFO to explain to your employees. First of all, please know that the PFO maintains a ledger for every PF account, similar to a bank account. Credits and debits are posted every month in this ledger. While credits that occur before the 5th of the month are eligible for interest calculation in that month, a debit even on the last day of the month is not eligible for interest in that month. The PF slip captures the gist of the ledger (OB, total credits, total debits, interest calculated, and CB).

I am attaching a model PF ledger, which is self-explanatory. The gist of transactions for the PF slip is shown at the end of the attachment.

Understanding Interest-Bearing Balance (IBB)

The essence for you to know is that the "interest-bearing balance" (IBB) is calculated every month. The total is struck at the end of the 12th month, and the average IBB is calculated by dividing the total by 12. One month's interest at the prevailing rate (9%) is calculated on this average IBB. If you have details of credits and debits, you can create a ledger and verify whether the interest shown has been calculated correctly.

Hope this will suffice.

Regards,
K. Raajaram

Calculation of PF Slip - Form 23

1. The closing balance of the previous year is converted to the opening balance in the current year (Employee & employer).
2. Current year PF contribution (Employee & employer).
3. The sum of both contributions is added to the opening balance.
4. Add and carry forward the closing balance on a month-to-month basis in monthly contributions. After the closing of the year, calculate the average of the sum and determine the percentage.
5. Add Opening balance + Current contribution + % = Closing balance.

I am familiar with the normal terms related to PF & EPF slips, but throughout the entire year, how is the interest rate calculated and placed in Form No. 23, i.e., the provident fund slip? I am uncertain about this aspect. Can anybody explain with an example?

I hope for a prompt reply.

Regards,
Amit Trada

Please check this out. It may help you to some extent.

Regards,
Bijay

Here is a very simple formula for calculating your PF slip. Please update your monthly wage details in the attached Excel sheet and calculate your PF percentage.

Regards,