what is meant by provident fund? how to calculate the provident fund in a company? who are all eligible for provident fund? what are the forms used for providend fund?
From India, Delhi
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2From India, Delhi
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There are two types of Provident Fund:
1. PPF - Public Provident Fund
2. EPF - Employee Provident Fund
In an organization, we are concerned with EPF.
P.F (PROVIDENT FUND):
1. PF is a statutory deduction. It is deducted on Basic + D.A + Cash value of Food Allowance @ 12%.
- D.A is provided only in government departments. Private companies generally do not give Daily Allowance to their employees.
2. The company pays P.F on either actual or Capped Basic. Capped basic is decided based on company rules and is not restricted. It is applicable to those employees whose basic exceeds Rs. 6500/- only.
3. Employer and Employee Contributions are equal in P.F, which is 12%. This means a 12% contribution from the Employee and a 12% contribution from the Employer. Company contribution is split into two parts: 8.33% on Family Pension Fund and 3.67% on Employee Provident Fund.
4. Every month, the Employer needs to pay additional charges over and above PF Company Contribution as per the below breakdown:
- 1.1% P.F Administration Charges,
- 0.5% on Employee Deposit Linked Insurance (E.D.L.I),
- 0.01% E.D.L.I Administration Charges.
- In the case the company has exemption in EDLI u/s 17(2a), the company need not pay employee deposit-linked charges of 0.5%, and the administration charges are levied at 0.005% instead of 0.010%.
5. The company needs to file Monthly and Annual Returns. Every month, the company has to submit a duly paid P.F Challan, Form 12A, Form-5 (additions), Form 10 (deletions), and Nomination Form-2 (newly joined employee details). In the Annual Return, we need to file Form 3A and 6A along with the details of Annual PF Challan payments.
6. The employer needs to collect, certify, and submit the Nomination and Declaration Form in Form-2 of every new joiner to the scheme along with the monthly report.
7. P.F. Monthly payment due date is the 15th with a grace period up to the 21st. Monthly Returns due date is the 25th of the following month, and the Annual Return due date is the 30th of April.
- As per P.F authorities, the fiscal year is from 1st March to 28th February.
8. Any employee who wishes to transfer his old company's PF balances can transfer his PF Current A/C using Form-13 signed by the current employer (new company employer), and the old employer has to submit Form 3A to the P.F office.
- Employee P.F Number will change with every company.
9. Any employee who wants to encash his P.F amount can draw the total amount using Form 10 C & Form 19. Form 10 C is E.P.F, and Form 19 is F.P.F.
10. Recently, P.F Authorities introduced an e-filing system. In this system, we have to submit P.F details every month in both soft and hard copies. There is no need to submit Annual Returns currently.
11. There are 5 accounts in the PF Challan as shown below:
- A/C#01 - PF contributed by Employers & Employees (12% & 3.67)
- A/C#02 – PF administration charges (1.1%)
- A/C#10 – Pension Fund Account (8.33%)
- A/C#21 – EDLI charges (0.5%)
- A/C#22 – EDLI Administration charges (0.10%)
Visit this site - EPFO for all the necessary information.
From India, Mumbai
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1. PPF - Public Provident Fund
2. EPF - Employee Provident Fund
In an organization, we are concerned with EPF.
P.F (PROVIDENT FUND):
1. PF is a statutory deduction. It is deducted on Basic + D.A + Cash value of Food Allowance @ 12%.
- D.A is provided only in government departments. Private companies generally do not give Daily Allowance to their employees.
2. The company pays P.F on either actual or Capped Basic. Capped basic is decided based on company rules and is not restricted. It is applicable to those employees whose basic exceeds Rs. 6500/- only.
3. Employer and Employee Contributions are equal in P.F, which is 12%. This means a 12% contribution from the Employee and a 12% contribution from the Employer. Company contribution is split into two parts: 8.33% on Family Pension Fund and 3.67% on Employee Provident Fund.
4. Every month, the Employer needs to pay additional charges over and above PF Company Contribution as per the below breakdown:
- 1.1% P.F Administration Charges,
- 0.5% on Employee Deposit Linked Insurance (E.D.L.I),
- 0.01% E.D.L.I Administration Charges.
- In the case the company has exemption in EDLI u/s 17(2a), the company need not pay employee deposit-linked charges of 0.5%, and the administration charges are levied at 0.005% instead of 0.010%.
5. The company needs to file Monthly and Annual Returns. Every month, the company has to submit a duly paid P.F Challan, Form 12A, Form-5 (additions), Form 10 (deletions), and Nomination Form-2 (newly joined employee details). In the Annual Return, we need to file Form 3A and 6A along with the details of Annual PF Challan payments.
6. The employer needs to collect, certify, and submit the Nomination and Declaration Form in Form-2 of every new joiner to the scheme along with the monthly report.
7. P.F. Monthly payment due date is the 15th with a grace period up to the 21st. Monthly Returns due date is the 25th of the following month, and the Annual Return due date is the 30th of April.
- As per P.F authorities, the fiscal year is from 1st March to 28th February.
8. Any employee who wishes to transfer his old company's PF balances can transfer his PF Current A/C using Form-13 signed by the current employer (new company employer), and the old employer has to submit Form 3A to the P.F office.
- Employee P.F Number will change with every company.
9. Any employee who wants to encash his P.F amount can draw the total amount using Form 10 C & Form 19. Form 10 C is E.P.F, and Form 19 is F.P.F.
10. Recently, P.F Authorities introduced an e-filing system. In this system, we have to submit P.F details every month in both soft and hard copies. There is no need to submit Annual Returns currently.
11. There are 5 accounts in the PF Challan as shown below:
- A/C#01 - PF contributed by Employers & Employees (12% & 3.67)
- A/C#02 – PF administration charges (1.1%)
- A/C#10 – Pension Fund Account (8.33%)
- A/C#21 – EDLI charges (0.5%)
- A/C#22 – EDLI Administration charges (0.10%)
Visit this site - EPFO for all the necessary information.
From India, Mumbai
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Hi , I have received Form 13 (for transferring his PF )from ex - employee duly signed and stamped by his current employer. What should be my action on this now Regards, MD
From India, Calcutta
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From India, Calcutta
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Clarification on Provident Fund Contributions
You have elaborately explained the provident fund. Good. However, one thing is missing: statutorily, you have to deduct at the rate of 12% for both employee and management contributions. The ceiling is restricted to ₹6,500. What about employees earning more than ₹6,500? The Act's provisions under the relevant sections or regulations are not mentioned. Could you please update it?
Regards,
MRN. Murthy
From India, Bangalore
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You have elaborately explained the provident fund. Good. However, one thing is missing: statutorily, you have to deduct at the rate of 12% for both employee and management contributions. The ceiling is restricted to ₹6,500. What about employees earning more than ₹6,500? The Act's provisions under the relevant sections or regulations are not mentioned. Could you please update it?
Regards,
MRN. Murthy
From India, Bangalore
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I am taking care of PF contributions for 300 employees who are casual laborers. They are unstable in work—they work for one month and then go on leave the next month. During their leave, they cannot make contributions for that month. I need assistance in carrying forward their accounts for the next month without deletion.
From India, Bangalore
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From India, Bangalore
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Mr.Yaasin, you have very clearly and simply explained EPF Scheme which is really helpful to understand basics of EPF Scheme Mitesh Verma
From India, Ahmedabad
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From India, Ahmedabad
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Please guide me on this:
My company offers CTC which includes deductions of PF & ESIC from the employer's side as well as from the employees' monthly gross only.
So, will employer deductions also fluctuate according to employee gross or not?
From India, Thane
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My company offers CTC which includes deductions of PF & ESIC from the employer's side as well as from the employees' monthly gross only.
So, will employer deductions also fluctuate according to employee gross or not?
From India, Thane
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You should refer to this article: [Provident Fund - What you need to know](http://quikchex.in/provident-fund-india-guide/). It pretty much covers all the questions that you may have regarding Provident Fund.
Another pretty useful article is the one on how to register for PF. [Registering for Provident Fund - Step by Step guide](http://quikchex.in/provident-fund-registration-made-easy).
I've also attached the PDFs of these articles to this email.
From India, Mumbai
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Another pretty useful article is the one on how to register for PF. [Registering for Provident Fund - Step by Step guide](http://quikchex.in/provident-fund-registration-made-easy).
I've also attached the PDFs of these articles to this email.
From India, Mumbai
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Provident Fund - Excluded Employee - Definition.pdf
What is Employee Provident Fund.docx