EPF Ceiling Limit
The EPF ceiling limit is fixed at ₹6,500. The employer is liable to pay contributions only on ₹6,500, regardless of the basic salary.
Calculation of Employees' Provident Fund
Let us calculate the contribution of an employee receiving a basic salary of ₹3,500.
| Contribution Towards | Calculation | Amount |
|---------------------------|--------------|--------|
| EPF Employees' share | 3500 x 12% | 420 |
| EPS Employer's share | 3500 x 8.33% | 292 |
| EPF Employer's share | 3500 x 3.67% | 128 |
| EDLI charges | 3500 x 0.5% | 18 |
| EPF Admin charges | 3500 x 1.1% | 39 |
| EDLI Admin charges | 3500 x 0.01% | 0.35 (rounded up to ₹1) |
The calculation above is straightforward with no complications.
Calculation of EPF for employees receiving a basic salary exceeding the ceiling limit of ₹6,500 involves different methods based on the company's payroll policy.
Consider an employee with a basic salary of ₹7,500. The calculation methods are as follows, ensuring EPS is calculated only up to ₹6,500 with a maximum amount of ₹541.00.
Method-1: If your company considers the total basic salary above the fixed limit of ₹6,500 for PF calculation.
| Contribution Towards | Calculation | Amount |
|---------------------------|--------------------|--------|
| EPF Employees' share | 7500 x 12% | 900 |
| EPS Employer's share | 6500 x 8.33% | 541 |
| EPF Employer's share | 7500 x 12% (-) 541 | 359 |
| EDLI charges | 7500 x 0.5% | 38 |
| EPF Admin charges | 7500 x 1.1% | 83 |
| EDLI Admin charges | 7500 x 0.01% | 0.75 (rounded up to ₹1) |
In Method-1, the employer contribution of EPS and EPF is explained. The employer contribution on the total basic salary of ₹7,500, which is 12%, amounts to ₹900.00. The EPS share is fixed at ₹541.00, with the balance of ₹359.00 going to the EPF account. The 3.67% does not need consideration here.
Method-2: Some companies calculate the employee share based on ₹7,500 and the employer share on the upper limit of ₹6,500.
| Contribution Towards | Calculation | Amount |
|---------------------------|--------------|--------|
| EPF Employees' share | 7500 x 12% | 900 |
| EPS Employer's share | 6500 x 8.33% | 541 |
| EPF Employer's share | 6500 x 3.67% | 239 |
| EDLI charges | 6500 x 0.5% | 33 |
| EPF Admin charges | 6500 x 1.1% | 72 |
| EDLI Admin charges | 6500 x 0.01% | 0.65 (rounded up to ₹1) |
Method-3: Some calculate both employer and employee shares on ₹6,500 despite a higher basic salary.
| Contribution Towards | Calculation | Amount |
|---------------------------|--------------|--------|
| EPF Employees' share | 6500 x 12% | 780 |
| EPS Employer's share | 6500 x 8.33% | 541 |
| EPF Employer's share | 6500 x 3.67% | 239 |
| EDLI charges | 6500 x 0.5% | 33 |
| EPF Admin charges | 6500 x 1.1% | 72 |
| EDLI Admin charges | 6500 x 0.01% | 0.65 (rounded up to ₹1) |
Detailed Accounts under PF
There are five accounts:
1) AC 1 (PF)
- (BA+DA) 12% → Employee share
- (BA+DA) 3.67% → Employer share
2) AC 10 (Pension)
- (BA+DA) 8.33% → Employer share
3) AC 2 (Administration Charges)
- (BA+DA) 1.1% → Employer share
4) AC 21 (EDLI - Employees' Deposit Linked Insurance)
- (BA+DA) 0.5% → Employer share
5) AC 22 (EDLI Administration charges)
- (BA+DA) 0.01% → Employer share
Regards,
Boopathi.
From India, Coimbatore
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The EPF ceiling limit is fixed at ₹6,500. The employer is liable to pay contributions only on ₹6,500, regardless of the basic salary.
Calculation of Employees' Provident Fund
Let us calculate the contribution of an employee receiving a basic salary of ₹3,500.
| Contribution Towards | Calculation | Amount |
|---------------------------|--------------|--------|
| EPF Employees' share | 3500 x 12% | 420 |
| EPS Employer's share | 3500 x 8.33% | 292 |
| EPF Employer's share | 3500 x 3.67% | 128 |
| EDLI charges | 3500 x 0.5% | 18 |
| EPF Admin charges | 3500 x 1.1% | 39 |
| EDLI Admin charges | 3500 x 0.01% | 0.35 (rounded up to ₹1) |
The calculation above is straightforward with no complications.
Calculation of EPF for employees receiving a basic salary exceeding the ceiling limit of ₹6,500 involves different methods based on the company's payroll policy.
Consider an employee with a basic salary of ₹7,500. The calculation methods are as follows, ensuring EPS is calculated only up to ₹6,500 with a maximum amount of ₹541.00.
Method-1: If your company considers the total basic salary above the fixed limit of ₹6,500 for PF calculation.
| Contribution Towards | Calculation | Amount |
|---------------------------|--------------------|--------|
| EPF Employees' share | 7500 x 12% | 900 |
| EPS Employer's share | 6500 x 8.33% | 541 |
| EPF Employer's share | 7500 x 12% (-) 541 | 359 |
| EDLI charges | 7500 x 0.5% | 38 |
| EPF Admin charges | 7500 x 1.1% | 83 |
| EDLI Admin charges | 7500 x 0.01% | 0.75 (rounded up to ₹1) |
In Method-1, the employer contribution of EPS and EPF is explained. The employer contribution on the total basic salary of ₹7,500, which is 12%, amounts to ₹900.00. The EPS share is fixed at ₹541.00, with the balance of ₹359.00 going to the EPF account. The 3.67% does not need consideration here.
Method-2: Some companies calculate the employee share based on ₹7,500 and the employer share on the upper limit of ₹6,500.
| Contribution Towards | Calculation | Amount |
|---------------------------|--------------|--------|
| EPF Employees' share | 7500 x 12% | 900 |
| EPS Employer's share | 6500 x 8.33% | 541 |
| EPF Employer's share | 6500 x 3.67% | 239 |
| EDLI charges | 6500 x 0.5% | 33 |
| EPF Admin charges | 6500 x 1.1% | 72 |
| EDLI Admin charges | 6500 x 0.01% | 0.65 (rounded up to ₹1) |
Method-3: Some calculate both employer and employee shares on ₹6,500 despite a higher basic salary.
| Contribution Towards | Calculation | Amount |
|---------------------------|--------------|--------|
| EPF Employees' share | 6500 x 12% | 780 |
| EPS Employer's share | 6500 x 8.33% | 541 |
| EPF Employer's share | 6500 x 3.67% | 239 |
| EDLI charges | 6500 x 0.5% | 33 |
| EPF Admin charges | 6500 x 1.1% | 72 |
| EDLI Admin charges | 6500 x 0.01% | 0.65 (rounded up to ₹1) |
Detailed Accounts under PF
There are five accounts:
1) AC 1 (PF)
- (BA+DA) 12% → Employee share
- (BA+DA) 3.67% → Employer share
2) AC 10 (Pension)
- (BA+DA) 8.33% → Employer share
3) AC 2 (Administration Charges)
- (BA+DA) 1.1% → Employer share
4) AC 21 (EDLI - Employees' Deposit Linked Insurance)
- (BA+DA) 0.5% → Employer share
5) AC 22 (EDLI Administration charges)
- (BA+DA) 0.01% → Employer share
Regards,
Boopathi.
From India, Coimbatore
Acknowledge(0)Amend(0)
Please let me know the maximum basic for PF. For example, one of our employees' basic is Rs. 21,000. We deduct 12% PF on Rs. 21,000, which amounts to Rs. 2,520, and the employer also calculates based on Rs. 21,000.
Is this correct? Someone mentioned that the maximum basic for PF is Rs. 20,000. Is it true?
Thank you.
Regards
From India, Madras
Acknowledge(0)Amend(0)
1Is this correct? Someone mentioned that the maximum basic for PF is Rs. 20,000. Is it true?
Thank you.
Regards
From India, Madras
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Wage-ceiling-ep f-6500-15000-ci rcular-circular .pdf
PROVIDENT FUND CALCULATION.xls