My institution has around 90 branches in the state. The Provident Fund system is centralized at the head office - meaning thereby, Provident Fund deducted from the salaries of employees working in branches is remitted through Debit Notes at the head office, where the same is accumulated in their accounts. Along with the above PF accounting for head office employees is also done. The monthly salary of employees working in the head office is paid by the 25th of the month (5-6 days in advance), whereas for branches it is variable, i.e., by the 7th of the next month. The Provident Fund amount of all the employees (head office & branches) is transferred to their respective accounts by the 15th of the next month by posting of vouchers.
Now, my question is - Under the Employees' Provident Fund Act, 1952 - how is PF interest to be calculated on the monthly running balance - whether interest for the current month (voucher posting month) is to be considered or the preceding month (salary month)? Kindly explain with some examples.
From India, Chandigarh
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1Now, my question is - Under the Employees' Provident Fund Act, 1952 - how is PF interest to be calculated on the monthly running balance - whether interest for the current month (voucher posting month) is to be considered or the preceding month (salary month)? Kindly explain with some examples.
From India, Chandigarh
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The rules for PF are as follows:
1. Companies can give PF based on the gross salary drawn.
2. Limited PF: which is restricted to Basic and DA.
The interest for PF is computed on a reducing balance method:
- 12% from the employee.
- 12% from the employer.
- From the employer's contribution, a part of the fund is contributed to the Employee Pension Scheme (EPS).
Calculation for EPS:
1. Rs. 6500 * 8.33% (6500 is the maximum ceiling for PF), this is equal to Rs. 541.
2. If the Basic + DA is less than 6500, then the sum of the two * 8.33%.
Whichever is lesser, that amount is contributed to EPS, and the rest is taken to the EPF account.
Interest is calculated on a monthly basis using the reducing balance method.
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1. Companies can give PF based on the gross salary drawn.
2. Limited PF: which is restricted to Basic and DA.
The interest for PF is computed on a reducing balance method:
- 12% from the employee.
- 12% from the employer.
- From the employer's contribution, a part of the fund is contributed to the Employee Pension Scheme (EPS).
Calculation for EPS:
1. Rs. 6500 * 8.33% (6500 is the maximum ceiling for PF), this is equal to Rs. 541.
2. If the Basic + DA is less than 6500, then the sum of the two * 8.33%.
Whichever is lesser, that amount is contributed to EPS, and the rest is taken to the EPF account.
Interest is calculated on a monthly basis using the reducing balance method.
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PF is deducted on Basic + DA at a rate of 12% from the employee's side and 13.61% from the employer's side.
Bonus ranges from 8.33% to 20% of the basic pay and is paid during festivals.
ESI contributions are 1.75% from the employee's side and 4.75% from the employer's side.
From India, New Delhi
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Bonus ranges from 8.33% to 20% of the basic pay and is paid during festivals.
ESI contributions are 1.75% from the employee's side and 4.75% from the employer's side.
From India, New Delhi
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Provident Fund interest Calculation Tool -97-03.xls
PF Calculation Sheet To The Subscribers At the Time Of Provident Fund Withdrawal.pdf