Understanding PF Deductions: How Is Your 12% Contribution Split Between Accounts?

Kindly let me know if PF deduction is 12% on the basic salary. I am curious about how much of this 12% goes into the PF account and how much is allocated to the pension account.

Thank you.

The following will help you understand it better. There are three accounts in the calculation of PF:

1. EPF - The Employees' Provident Fund Scheme
2. EPS - The Employees' Pension Scheme
3. EDLI - Employees' Deposit Linked Insurance Scheme

For the calculation of EPF, 12% of the employee's contribution is added, and 3.67% from the employer's contribution. For the calculation of EPS, 8.33% will go for the pension from the employer's contribution. For EDLI, 1.61% is taken from the employer's contribution.

Additional charges are as follows:
- 1.1% Admin charges for EPS and EPF
- 0.5% EDLI Premium
- 0.01% Admin charges for EDLI

I hope this clarifies the calculation breakdown for you. Let me know if you need further information or assistance.

First of all, thank you for sparing time to reply to my query. However, my answer is still not clear. The PF share of the employee and employer is the same, i.e., 12% of basic. But according to you, the employer's share is 13.61%.

Now, my question is, is the employer paying more than the employee? Second, EPF, EPS, and EDLI charges will be deducted from which account: the employer or the employee?

After leaving, how much % will we get from the PF account as a 24% deposit in the PF account monthly?

For more clarification, you can also contact me at [Phone Number Removed For Privacy Reasons].

Regards,

You are correct that the contribution amount of both the employee and employer is 12% on PF. However, an amount of 13.61% is deducted from the employee's salary. This additional 1.61% is the administration charge borne by the employee only. Your final remuneration will be based upon your 12% contribution.

Dear Simran420,

You are correct that the contribution amount of both the employee and employer is 12% on PF. However, an amount of 13.61% is deducted from the employee's salary. This additional 1.61% is the administration charge borne by the employee only. Your final remuneration will be based upon your 12% contribution.

No employee has to contribute 12% only. The employee will pay 13.61% to PF. If there is an exempted Trust, the percentage of the employer's share will differ.

Regards,
Abbas.P.S

No, the employee has to contribute 12% only. The employer will pay 13.61% to the PF. If there is an exempted Trust, the percentage of the employer's share will differ.

Regards,
Abbas.P.S

Hi Abbas, Thanks for the PF breakup details. I have a quick query: is the 1.61% to be borne by the employee or the employer? As per the current salary structure prevailing in companies, the employer contribution as well as the employee contribution is deducted from CTC. Does that mean that the part of the employer contribution, i.e., 1.61%, is also to be deducted from the employee's CTC?

Regards,
[Username]

Clarification on PF Contributions

Here is the clarification to your query:

1. Employee's Contribution - 12% of the (Basic + DA) subject to a maximum of Rs. 6500. This amount is also allowable as a deduction from Gross Total Income under section 80C of Income Tax.

2. Employer's Contribution - 13.61%. The breakdown is as follows:
- 3.67% goes to the PF Account.
- 8.33% goes to the Pension Account.
- 0.50% goes to the Employees' Deposit Linked Insurance Account (EDLI).
- 1.11% is for Administrative Charges of managing these accounts.

So, eventually, we pay 15.67% to the PF Account.

Hope that helps.

Dear All, Thanks to all of you for replying.

Dear Mr. Darshan Balai, I think 15.67% has been mentioned by you wrongly. It should be 13.61%, right? All mentioned that one share will be 13.61%, but in CTC, both parties deposit an equal share, i.e., 12%. At the end, it concludes that either the employee or employer will pay 12.61%. The employee will get the PF amount after deducting 1.61% of all amounts.

As an example: Suppose Employee A's basic salary is Rs. 1000 per month, and the PF amount on Rs. 1000/- will be Rs. 120 for one share. The monthly deposit will be Rs. 120 + Rs. 120 = Rs. 240.00. After a year, A has left the job and withdraws his/her PF, then he/she should get Rs. 2880. However, he/she will only receive Rs. 2833 after deducting 1.61% admin charges.

Am I right? Please reply.

Regards, Simran