Understanding Provident Fund: How Are PF Calculations and Allowances Determined?

Understanding PF Calculation and Allowances

How is the amount of 780 calculated and paid for Provident Fund (PF)? What is the purpose of giving allowances? If an employee's monthly salary is 5000 (basic includes DA), is he or she eligible for PF? Does the amount of 6500 vary from company to company? Please clear my doubts as soon as possible.

Regards

Calculation and Payment of PF: Understanding the Rs. 780 Deduction

As per the EPF & Miscellaneous Act 1952, the ceiling limit of the monthly salary is Rs. 6,500. Accordingly, a deduction of 12%, i.e., Rs. 780, is statutory. Regarding the contribution on the actual salary above the ceiling limit, it is optional.

Purpose of Giving Allowances

Allowances are given to employees for their benefit.

Eligibility for PF with a Monthly Salary of Rs. 5,000

If an employee's monthly salary is Rs. 5,000 (basic includes DA), are they eligible for PF? Yes, he/she is eligible for PF as the ceiling limit of the monthly salary is Rs. 6,500.

Uniformity of the Rs. 6,500 Ceiling Across Companies

Does the amount Rs. 6,500 vary from company to company? No, because it is decided by the PF Department.