Confused About PF Deductions? Let's Clarify When and How It's Applied!

Hi, I am a new user of your site. I am not understanding where to find the deduction of PF. Please clear my issue.

My Issues Are:

1. When is PF applicable? Please provide all the points.
2. When an employee's salary is between 10,000 to 25,000 Rs., will PF be deducted or not?
3. When an employee's salary is between 3,000 to 6,500 Rs., will PF be deducted or not?
4. How should we deduct PF from our employees?
5. Where should employees find the deducted PF amount?

Please, sir, reply with the answers to my issues. Thanks in advance.

Best Regards,
Kripal
Asst. Accountant
Contact no. [Phone Number Removed For Privacy Reasons]

Employees' Provident Fund and Miscellaneous Provisions Act 1952

The Employees' Provident Fund and Miscellaneous Provisions Act 1952 applies to establishments where PF is applicable, provided 20 or more persons are employed.

Employees drawing a basic salary up to Rs 6,500/- have to compulsorily contribute to the Provident Fund. Employees drawing above Rs 6,501/- have the option to become a member of the Provident Fund. They can opt for the Voluntary Provident Fund (VPF), with a maximum contribution of 100% of the basic salary.

Pension and Provident Fund Withdrawal

It is mandatory for employees completing 10 years of service to opt for the pension. An employee completing 10 years of service cannot withdraw the entire PF (employer and employee's contribution). They are allowed to withdraw their contribution of 12% and the employer's contribution of 3.67% to PF. The balance amount, i.e., the employer's contribution amounting to 8.33%, will be paid by way of a pension.

When applicable for PF, please send all points. If the employee strength of your organization, including branch offices, exceeds 20, then your organization is to be registered under the PF Scheme.

PF Deduction for Salaries Between 10,000 to 25,000 INR

When an employee's salary is between 10,000 to 25,000 INR, will PF be deducted or not? If the above salary is Basic + DA, then the employee can be exempted from PF, or their PF can be deducted on Rs. 6,500 (PF limit), or their PF can be deducted on the whole Basic + DA.

PF Deduction for Salaries Between 3,000 to 6,500 INR

When an employee's salary is between 3,000 to 6,500, will PF be deducted or not? If the employee's Basic + DA is as mentioned above, then PF is compulsorily deducted on the whole Basic + DA. Here, you need to check if the Basic + DA aligns with the minimum wages of your state.

How to Deduct PF for Employees

PF is deducted on Basic + DA. For example: Basic + DA = 6,500. Employee PF contribution: 12% of 6,500 = Rs. 780 (This will be deducted from their salary). Employer PF Contribution: 12% of 6,500 + 1.61% = 13.61%.

12% is further divided as:
- 8.33% of 6,500 towards the Pension Scheme and 3.67% towards PF
- 0.5% towards EDLI (Employee Deposit Linked Insurance) Scheme
- Administrative charges of 1.10% towards EPF and 0.01% towards EDLIS.

Total: 13.61%

Where is the PF Deducted from the Employee?

This query is not clear. Please explain.

Hope this answers your doubts. Do revert for any further queries.

Regards.