Understanding Provident Fund Contributions: What's the Maximum You Can Contribute and Receive?

Hi,

How much should one contribute towards the PF amount as a maximum per year, and what is the maximum amount an employee can receive from the PF amount?

Please, could someone provide a reply?

Regards,
Ram S

Dear Ram,

Greetings. Recently, we discussed a lot about PF and its operation in the following thread, which is self-explanatory. Hope this would be sufficient for your queries.

Cheers,
Trisha
HR Professional

Dear Trisha,

Thank you for replying. I am asking about the maximum amount someone can get upon ending their employment.

Thanks and regards,

Ram S

Dear Ram,

Greetings.

There is no maximum amount fixed for withdrawal from the Provident Fund (PF). Whatever contribution we remit to one's account will be returned with an interest rate of 8.5% per year.

Cheers,
Trisha
HR Professional

Dear Trisha,

Thank you for your response. An employee's basic salary is 11,000. His contribution is 12%, amounting to 1320. He also makes a voluntary contribution of 45% per month. His yearly PF contribution amount is nearly 75,000. His service began 21 years ago, and he plans to end his service at either age 58 or 60.

How much will he receive as PF? If you understand my question, please contact my cell at 9840578093.

Thanks & regards, Ram S

Dear Trisha,

Please reply. Can an employee get a PF amount of Rs. 200,00,000? Is it possible or not? Please explain.

Regards,
Ram S

Dear Ram,

Greetings.

It is absolutely possible when he contributed 2 lakhs to his account.

Cheers,
Trisha
HR Professional

Hi Ram,

If an employee's basic salary is Rs. 11,000, then his annual contribution will be Rs. 15,840, and the employer will also contribute the same, as mentioned by Trisha Govt with an interest rate of 8.5%. However, this percentage may vary from year to year. This year, the percentage has not been decided yet.

Whatever amount the employee contributes, he will get back his money. I think I have explained what I know. If you have any more doubts, please email me at klavanya14@yahoo.co.in, and I will reply.

Lavanya

Hi Ram,

EPF contribution total is 25.61%. In this, 12% contribution is by the Employee himself, and the remaining 13.61% will be paid by the employer. Now, I am explaining for your question. If the employee's basic salary is 11000, his contribution is Rs. 1320 per month. Employer Contribution is Rs. 1497 per month. As per the EPF & MP Act 1952, the Employee Pension Fund's Ceiling Amount is Rs. 541 only. So, the remaining amount is deposited into the Provident Fund. If the employee contributes voluntarily, it will go to the Provident Fund's Account. If the employee pays for 21 years, he will get 8.5% of interest per annum (it will vary) and his total amount. Even if the total amount is 2 crores or more, he will be eligible (he has rights) to receive that amount.

Regards, Ravi Kumar T 09964519065

Dear Friends,

Based on my knowledge and experience, the maximum amount of PF contribution for employees is Rs. 780 per month (12% of the basic salary of Rs. 6,500). Regardless of the employee's salary, even if it is Rs. 1 lakh, the PF contribution will not exceed Rs. 780 per month.

Regards,
Sri

Dear Friend,

What Sri says is correct. Whatever the salary amount is, Rs. 780/-, the remaining amount will be transferred to the Employee Pension Scheme account only.

Lavanya

Hi Ram,

This is really a good one. Below are the points to be considered:

1. He starts giving 45% of his basic to PF without fail for all the years until he is 59.
2. There must be no cut in the service.
3. Considering that there will be no rise in salary.
4. Considering the interest rate will be 8.5% throughout the period.

Hold your breath... the person will get Rs. 2,22,07,542.00, i.e., Two Crores Twenty-two lakhs Seven thousand five hundred forty-two rupees.

Happy, so when can we get the party.

Cheers,
Suneel.

Hi Ram,

Naturally, these things are obvious and under calculation with slabs/rules/interest rates. If someone is making a higher contribution, they will accordingly receive more. This does not raise any significant question about whether they will receive 2 lakhs or 2 crores. If their contribution is on the higher side, targeting 2 crores, surely they will achieve that; no one can change or alter the fundamentals as all acts and rules are in place.

Thank you,
Tarun

Tarun,

I have mentioned the amount as per the requirement posted by Ram. Yes, you are correct that the rules may change. For that purpose, I have mentioned that if the rate of interest remains the same and without fail, the payment is being made.

One more thing is I have not considered that his salary will increase during the whole period. If you consider at least a 10% hike every year, then the amount will easily cross 3 Crores.

Regards,
Suneel.

Dear Ravi,

Thank you for your reply. The employee's contribution is 12% of his basic wages. For example, if his basic wage is 11,000, the contribution amount would be 1,320.

The employer's contribution is either 13.61% of the basic 11,000 or 13.61% of 6,500.

Please reply or call me on my mobile at 09840578093.

Thanks and regards,
Ram S

Ram,

It depends on the company. When the company has included the amount in CTC, they add it as the same basic option. If it is not included in the CTC, then they go for the 6500 slab.

Regards,
Suneel.

Hi Ram,

Most of the companies have started giving salaries in CTC format (Cost To Company), in which they provide all the details showing the total expenses to the company for hiring the person. This includes the PF component as well. They provide details such as PF for both the employee and employer, and bonuses within the CTC. In such cases, the company is willing to provide 12% of whatever the basic salary of the employee is, without incurring any additional cost.

However, some companies do not follow the CTC option. Instead, they fix the salary to include only what the employee receives. These companies set a limit of Rs. 6,500/- for the employer's contribution to the PF, allowing them to save money.

Regards,