Confused About Provident Fund Deductions? Is It Based on 20,000 or 15,000?

I'm working professionally with a company where my basic salary is Rs. 20,000, but my employer deducts my Provident Fund based on Rs. 15,000. In my opinion, my contribution should be:

= 20,000 * 12% = Rs. 2,400 (Employee Contribution)

However, on my salary slip, my contribution is calculated as:

= 15,000 * 12% = Rs. 1,800 (Employee Contribution)

My employer deducts the employer's contribution based on Rs. 15,000. I would like to know which calculation is correct—mine or my employer's. If there is any notification regarding this, please share.

Hi,

As your basic salary exceeds the ceiling limit of 15000/-, PF shall be contributed based on the ceiling limit only. Therefore, your EPF contribution shall be 12% of 15000/- (15000 X 12% = 1800), which is correct.

Thank you.

Dear Jeevarathnam P,

In my previous organization, they had deducted the employee contribution based on actual basic salary. For example, if an employee's basic salary is Rs. 30,000, then the employee's contribution would amount to Rs. 3,600.

Please advise.

Thank you.

Your employer is correct because the EPF limit is Rs. 15,000, as decided by the EPFO.

As per PF regulations, employers are mandatory to pay employer contributions only on Rs. 15,000 (this has recently been revised, earlier it was Rs. 6,500). Employers can, at their own discretion, pay more to match the 12% contribution.

However, you can contribute 12% as an employee contribution. I hope this clarifies your query.

As per the new amendment, after increasing the PF slab from Rs. 6,500/- to Rs. 15,000/-, the employer has to deduct PF contributions for Rs. 15,000/- for those who are drawing a salary of more than Rs. 15,000/-, and actuals for those who are drawing less than Rs. 15,000/-. This is for your information. If you want to contribute more for the employee's contribution, you can do so, but your employer will only contribute for Rs. 15,000/-.

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Please let me know if you need any further assistance or clarification.

@EmployeeIBM,

Please check the copy of your offer letter and appointment letter, which shows the salary breakup. The employer's contribution to PF is shown as Cost To Company. Does it show PF as 12% of Basic or 12% of 15000?

Hello,

Your employer is right. Legally, he is bound to deduct the employer's share on $15,000. However, if he is not willing, he may choose not to do so. You cannot compel him to deduct on $20,000. Here is a clear-cut explanation of the contribution: [EPF employees provident fund calculation, EPS, EDLI, Admin](http://taxin.in/epf/employees-provident-fund-epf-eps-edli-calculation-ceiling-limit/).

The article provides information on how to calculate EPF contributions.

Thanks

Dear Sir,

If the salary is 18000 per month, then 12% cannot be deducted from our salary. If it can be deducted, is there any gazetted notification available? Please reply.

Thank you.

Sir, the principal employer wants to contribute more than 15,000 towards PF, like 16,000. Should we contribute PF based on 16,000?

Dear Sir/Madam,

In my opinion, my Basic + Special Allowance + Ex-gratia is (12000 + 4000 + 4000) = Rs. 20,000/- as per the judgment of the Supreme Court in Civil Appeal No. 6221 of 2011, considering the maximum limit of Rs. 15,000 * 12% = Rs. 1800 (Employee Contribution).

I would like to know the correct formula in Excel format for this rule.

If an employee's basic salary is Rs. 30,000.00 and they remain absent for 15 days, the Provident Fund (PF) will be deducted on either Rs. 7,500 or Rs. 15,000.00 as per the Act.

Please clarify.

Regards, Sone Lal Kashyap