Understanding EPF Deductions: How Does It Work for a Rs. 40,000 Salary?

Sir, if an employee receives a salary of Rs. 40,000/- per month (with a basic salary of Rs. 20,000/-), can they deduct PF from their salary, and what will be the employer's contribution? Please clarify.

Regards,
Bablu Paul

Hi Bablu Paul, This shows the Gross Salary is 40K, out of which your Basic Salary is 20K. Actually, the exemption limit is 15K (Basic). Now, one can opt-out for no deduction. But if you want to contribute, the following is the rule.

Employer contribution to EPF:
3.67% of salary (PF Fund).

Employer contribution to EPS:
8.33% of salary (Pension Fund).

Subject to a ceiling of Rs. 15K salary, i.e., Rs. 1,250. Please note that you can do the full deduction on 20K, which is Rs. 1,666.

Hope this will clear your doubts.

You can deduct 12% of the PF Salary and need an additional Employer contribution of 13% of the PF Salary.

Thank you.