Curious About Your PF? Understanding Deductions, Company Share, and Interest Over 17 Months

Hi, I have a query on PF. If my PF deduction is ₹780, what will the total amount be, or how is the total amount calculated? Also, what is the company's share and the interest we get if it is for 17 months?

You have contributed to PF at ₹780 per month for a total of 17 months. Your employer has contributed an equal amount of ₹780 per month for a total of 17 months, out of which the PF contribution is ₹239 per month, and the remaining ₹541 is in the pension account.

Your share towards PF for 17 months at ₹780 is ₹13,260. Your employer's share towards PF for 17 months at ₹239 is ₹4,063. Your total share towards PF for 17 months is ₹17,323 without interest. The interest rate keeps on changing and is as follows:

- 1996 to 2000: 12%
- 2000 to 2001: 11%
- 2001 to 2005: 9.5%
- 2005 to 2010: 8.5%
- 2010 to 2011: 9.5%
- 2011 to 2012: 8.25%

Compound interest is calculated on a monthly contribution basis.

Your employer has contributed towards the pension at ₹541 for a total of 17 months, totaling ₹9,197. You can withdraw your pension or take a scheme certificate. No interest is payable on withdrawal, and this withdrawal is not the withdrawal of your accumulation amount in the scheme. The withdrawal value is decided based on the proportion of PS wages at the time of exit, as given in Table D under paragraph 14 of the scheme.

You worked for 17 months. That means your completed year of service is one year. In this case, your withdrawal, i.e., return of contribution, will be 6,500 x 1.02 = 6,630. (1.02 is a proportion of PS wages at exit on 1 year of completed service as given in Table D of the scheme).

Regards

If your PF deduction is ₹780 per month, then your basic pay + DA should be ₹6,500. As per PF rules, the employee contribution is 12% of your Basic Pay + DA, which should not exceed ₹6,500. For example, if your BASIC and DA is ₹7,500, then the employer can deduct the PF on ₹6,500 only, and that will be fixed. If your BASIC + DA is ₹6,000, then it will be ₹720.

(Typically 12% of the Basic, DA, and cash value of food allowances)

Calculation of Employees Provident Fund Contributions

Basic salary of ₹3,500

Let us calculate the contribution of an employee who is getting a basic salary of ₹3,500.

Contribution Towards | Calculation | Amount
--- | --- | ---
EPF Employees share | 3500 x 12% | 420
EPS Employer share | 3500 x 8.33% | 292
EPF employer share | 3500 x 3.67% | 128
EDLI charges | 3500 x 0.5% | 18
EPF Admin charges | 3500 x 1.1% | 39
EDLI Admin charges | 3500 x 0.01% | 0.35 (rounded up to ₹1)

Basic salary above ₹6,500

In such cases, companies use different methods for calculation as per their payroll policy. Consider an employee getting a basic salary of ₹7,500. We can calculate it in different ways, but EPS is calculated only up to ₹6,500, meaning the maximum amount is fixed at ₹541.00. The three methods mentioned below are based on the above example.

Method-1

If the company considers the total basic salary above the limit fixed at ₹6,500 for PF calculation, the employer has decided to contribute on the total basic salary, which is 12% on ₹7,500, equal to ₹900. The EPS Share is fixed at ₹541. The balance (900-541) goes to the EPF account, ₹359. You may be thinking, what about 3.67%? Here you don't need to care about it.

Contribution Towards | Calculation | Amount
--- | --- | ---
EPF Employees share | 7500 x 12% | 900
EPS Employer share | 6500 x 8.33% | 541
EPF employer share | 7500 x 12% (-) 541 | 359
EDLI charges | 7500 x 0.5% | 38
EPF Admin charges | 7500 x 1.1% | 83
EDLI Admin charges | 7500 x 0.01% | 0.75 (rounded up to ₹1)

Method-2

Some companies follow the below method in which the employee share is calculated on ₹7,500 and the employer share is calculated on the upper limit of ₹6,500.

Contribution Towards | Calculation | Amount
--- | --- | ---
EPF Employees share | 7500 x 12% | 900
EPS Employer share | 6500 x 8.33% | 541
EPF employer share | 6500 x 3.67% | 239
EDLI charges | 6500 x 0.5% | 33
EPF Admin charges | 6500 x 1.1% | 72
EDLI Admin charges | 6500 x 0.01% | 0.65 (rounded up to ₹1)

Method-3

Some companies calculate both employer and employee shares on ₹6,500 despite a higher basic salary than ₹6,500.

Contribution Towards | Calculation | Amount
--- | --- | ---
EPF Employees share | 6500 x 12% | 780
EPS Employer share | 6500 x 8.33% | 541
EPF employer share | 6500 x 3.67% | 239
EDLI charges | 6500 x 0.5% | 33
EPF Admin charges | 6500 x 1.1% | 72
EDLI Admin charges | 6500 x 0.01% | 0.65 (rounded up to ₹1)