Understanding Provident Fund: Why Is Employer Contribution Capped at Rs. 6500?

Can anyone tell me what are the accounts related to provident fund? And what's the logic behind the restriction of employer contribution to Rs. 6500?

Dear Debasis,

Please do a quick search on "Provident Fund." Both of your queries have been covered before. I hope this helps. In case of further doubts, you can address them to the forum.

Regards,
Anuradha

Hi Anuradha,

I am new to the forum, so I am finding it difficult to gather information from the site. I have sorted out the problem relating to the restriction of Rs. 6500. However, I still have doubts about the various accounts to which the contributions should be deposited at the end of the period. I would appreciate some help with that.

With regards,
Debasish Das

Dear Debashis,

In PF Main deduction, there are contributions from both employers and employees:

a) Employees contribute 12% of the basic salary.

b) For employers, the 12% is divided into 8.33% for the Pension Scheme and 3.67% for the Provident Fund.

c) Additionally, there is the Employee Deposit Linked Insurance (EDLI) scheme, to which only the employer contributes 0.5% of the PF salary.

d) There are administrative charges, categorized as PF Administrative Charges at 1.10% and EDLI Administrative Charges at 0.01%.

e) If your company has its own PF trust, you are exempt from paying administrative charges, but you are charged Inspection Charges at 0.18%.

Thanks & Regards,
Amal Shere

Dear Friend,

According to my knowledge, there are 5 accounts:
AC-1
AC-2
AC-10
AC-21
AC-22

And for your reference, I'm enclosing one challan form as an example.