Understanding EPF Contributions: How Is Your Salary Divided Between EPF, EPS, and EDLI?

EPF Rate 13.16% W. E. F 01/04/2017
Break-up of the EPF contribution
12% of the employee's salary goes towards the EPF.
Whereas the employer's contribution is divided as below:
3.67% goes towards contribution for EPF
8.33% goes towards contribution for EPS
0.5% goes towards contribution for EDLI
0.65% goes towards contribution for EPF administration charges
0.01% goes towards contribution for EDLI administration charges

No administration charges for EDLI temporarily from 1st April '17. Total contribution payable is only 13.15%.

Regards, N. Nataraajhan, Sakthi Management Services (Hp: +91 94835 17402; e-mail: natraj@sakthimanagement.com)

Thank you for sharing the useful notification.

Admin charges on PF

Regarding the admin charges on PF, I agree that they have been revised from 0.85% to 0.65%, with some fixed minimum charges of Rs. 75 and Rs. 500 (as applicable), as described under S.O. 827(E) of the attached notification.

Admin charges of EDLI

I have some doubts regarding the admin charges of EDLI as mentioned in S.O. 828(E) in the same notification, which states: "the Central Government hereby determines that 'no sum' shall be payable for the time being by the employer in relation to his employees as the further sum payable by the employer every month to the Deposit-Linked Insurance Fund for meeting the expenses in connection with the administration of the Employees Deposit-Linked Insurance Scheme, 1976, other than the expenses towards the cost of any benefits provided by or under that Scheme."

I believe this indicates that no charges will be payable towards admin charges on EDLI as well (which is presently 0.01% or as the minimum amount specified).

Revised charges for employers

According to my calculations, the revised charges for employers will be 13.15% (12% + 0.65% + 0.50%, being EPF + Admin Charges on PF + EDLI Benefit Charges, respectively).

Though this is a very small amount, I deal with a large number of subcontracting staff, so it affects our costs.

Moreover, as professionals, we need to interpret the clause in the right and deep direction. In this regard, I seek the valued advice of our senior members.

Hi,

In my point of view, the contribution percentage is 25.15% (including Employee and Employer).

S. Jawahar
9486982419

Dear Seniors,

Please explain the below line: "subject to a minimum sum of seventy-five rupees per month for every non-functional establishment having no contributory member and five hundred rupees per month per establishment for other establishments".

Also, explain what a non-functional establishment is and why an organization with no PF member must contribute 75 rupees ('having no contributory member').

Hi, I still have confusion regarding administrative charges on EDLI. Do we have to calculate 0.01% or is it nil? I enquired with our regional EPF office about this, but they don't have knowledge of this notification. How can the general public get clarification?

Dear Mr. Gokul, that means any organization which is covered under EPFO but does not have any employees for PF deduction (there may be any reason like the establishment has been closed for the time being, and no deduction towards PF) will be treated as a non-functional establishment. Such an establishment needs to deposit the minimum administration charges. Since there are no wages to calculate the admin charges, it is fixed at Rs. 75. This means if the establishment is not making any profit, it either has to surrender the registration or deposit the minimum admin charges.

In the other case, if in any establishment there are very few employees whose wages for calculating the admin charges are very low, and if the amount against admin charges comes to less than Rs. 500/-, then such an establishment needs to deposit at least Rs. 500/- as admin charges. For example, if the PF wages for any month are Rs. 75,000/-, then the admin charges towards admin charges come to Rs. 488/- (75000*0.65/100). Such establishments have to deposit at least Rs. 500/-.

Hope this will resolve your query. Learned members can correct me if there is something required.

Surely, it has resolved my doubts. However, I have some more queries:

Calculation of PF Charges

Suppose an organization has 20 employees with a PF wage of 10,000 each. Will they have to pay 500 for each employee or 1,300 (10,000 * 20 = 200,000 * 0.65%)? How is this charge calculated — is it based on the individual employee or on the entire PF wage of the organization?

Discontinuation of PF for High Earners

Suppose an organization was initially eligible for PF. Over time, all the employees have earned a PF wage above 15,000, and the organization decides to discontinue PF for them. In this case, can the organization still be a member of PF by paying Rs. 75 only so that they do not have to surrender the registration and can use it in future recruitment? Is it only Rs. 75 or 75 * number of employees?

Thank you.

Dear Mr. Gokul,

As stated in the notification, Rs. 500/- is the minimum amount. If, as per calculation, the actual amount exceeds Rs. 500/-, then you have to deposit the actual amount (Rs. 1300 as per your calculation). The amount is not Rs. 500 per employee; rather, it is the total minimum amount for the month towards administration charges.

In your next query, since only the employee's wages have exceeded the PF ceiling, but they are still members of PF. As per the Act, "Excluded Employee": The below mentions should be treated as "Excluded Employee."

(i) An employee who withdrew the full amount of his Fund.

(ii) Whose pay at the time (entitlement of becoming a member) exceeds Rs. 15,000/- per month. A member shall continue to be a member until he attains the age of 58 years or avails the withdrawal benefit.

In the future, the wage ceiling may increase, or you may need to appoint an employee under the wage ceiling. So you can’t decide to discontinue. Moreover, there may be an employee who is eligible for a pension, and then you have to process his claim.

You can surrender the registration when the establishment is not making a profit, and you want to shut it down thoroughly. Yes, by paying Rs. 75 only, you can use it for all future references. But it is applicable only when you have NO employee as a monthly contributor. If even a single person is available for monthly contribution, then you have to pay Rs. 500/-.

Still, I advise, if the case requires, you can take some consultant's services on the matter.

Dear PAN SINGH Sir,

Thank you so much for your explanation. The topic was clearly explained by you, and you have answered all my queries. All points were precise and in simple language.

Sir,

There is a slight modification to Gourtam Kar's posting. Effective from 1st April 2017, the employer has to pay 13.15% instead of 13.16%. There is no need to pay a 0.01% contribution towards administrative charges on EDLI from April this year. Thank you for providing the gazette notification.

LOKANADHA BABU NARRA MANAGER

Please review the revised Provident Fund administration charges as we have already made the payment. How can we initiate the refund process?

Hi, Sir.

I have made the EPF contributions for my employees. Is this the correct format? Could you please explain it to me?

Thank you.

Hi, sir,

Madhav has been trying to activate his PF account online but is unable to log in using his date of birth. Can you please let us know how we can help him log in? Please find his date of birth mentioned below.

Hi sir,
Please find more employee's complaining of a new UAN number despite sharing his previous PF account details.
Please suggest what i do

Non-functional establishment means establishments not having any PF-covered employees on its roll, establishments not functioning but alive.

Please let me know if you need further assistance.

Dear Sir,

Kindly update new PF calculations for both employees and employers with percentages. How to file monthly contributions? Withdrawal procedure or transfer old PF?

Best Regards,

Nagaraj

9916818074

Dear all,

Kindly tell me the exact PF contribution rate because I am confused about EDLI 0.01.

Please help me.

Dear Devrana0999,

The EDLI charges are 0.50%; however, the administrative charges of 0.01% are not applicable wef 01 Apr. 2017.

Hope it is now clear to you.

Please tell me the exact breakup of the charges for employer contribution to PF effective from 1st June 2018. Will it be 13.01%?

Please provide me with the detailed breakdown of the employer's contributions to the Provident Fund effective from June 1st, 2018.

Hello sir,

Please tell me the exact breakdown of the charges for employer contributions to PF effective from June 1, 2018.

Dear Member,

The PF admin charges have been reduced to 0.50% effective from 1st June '18. Now, the employer needs to deposit a total of 13.00% towards the employer's contribution.

- Employee PF: 12% (will be deducted from the employee's salary)
- Employer PF: 12% (further divided into EPS and EPF)
- EDLI: 0.50%
- PF Admin Charges: 0.50%

The Admin charges on EDLI (0.01%) have also been withdrawn effective from 1st Apr. '17. I hope this clarifies the points for everyone.

Hi,

Could someone please clarify the ceiling amount if an employee's wage exceeds the Rs. 15,000 per month limit? I need details on the contributions required from both employees and the employer.

Thanks,
Shailender

Requesting Shailendra,

Kindly specify the question - are you asking for the gross wages, the PF contribution, or the ESIC contribution? Wages can exceed 15,000; it will depend on the minimum wages of your state or a particular industry.

I wanted to clarify that even if the basic pay of an employee exceeds 15k per month, the company can deduct 12% on 15k for EPF as an employee contribution. I am seeking information on what the total contribution or payment by the employer would be.

Thank you.