Here we will learn complete details about PF like what is PF, What are Different Rates of PF like EPF, EPS, Difference, PF Admin Charges, EDLI Admin Charges etc)
What is Provident Fund
It is a scheme for the benefit of employees,
In this scheme,
- Certain amount is deducted from employee salary.
- Some amount is also contributed by Employer(Company)
- Both Employer and Employee Contribution is invested
- Every year Interest is earned on amount Contributed.
- Whole Amt (Employer+ Employee + Interest) is received later on retirement etc
What are the rates of PF?
Both Employer and Employee Contribute towards PF
Employee Contribution to PF
12% of (Basic Salary+ DA)
Note:- In case of Private Companies,there is no DA (Dearness Allowance) ,hence it is 12% of Basic
Employer Contribution
Employer (Company) also contribute 12%
but it goes in 2 heads
- Employee Pension Scheme (EPS) 8.33%
- Difference
Why Employer share is in 2 Parts, EPS and Difference?
EPS Amount
View answer
EPS means Employee Pension Scheme
This amount is received as pension on retirement of person
This cannot be more than 1250 pm for employee (15000*8.33%)
Difference Amount
View answer
This amount is added to PF amount and is received on retirement of a person
It is difference of EPF and EPS
Suppose Employee pays PF of 4000
Employer also has to pay PF of 4000
Out of this 1250 is deposited as EPS
Balance Amount of 4000-1250=2750 is called Difference
Example 1
Suppose Basic Salary is 10000
DA is 2000
EPS=8.33% OF 12000=1000
Example 2
Suppose Basic Salary is 100000
DA is 2000
EPS=8.33% OF 15000=1250
Important Points
EXAMPLE 1
If Basic + DA is upto 10000, Calculate Employee and Employer Contribution?
View answer
Employee Contribution
EPF=12% *10000=1200
Employer Contribution
EPS=8,33%*10000=833
Difference=1200-833=367
Total Employer=833+367=1200
EXAMPLE 2
If Basic + DA is 2000, Calculate Employee and Employer Contribution?
View answer
in Many Companies, Employee and Employer are Paying PF on higher amount of 20000
Employee Contribution
EPF=12% *20000=2400
Employer Contribution
EPS=8,33%*15000=1250
Difference=2400-1250=1150
Total Employer PF=1250+1150=2400
Note-
Even if PF is calculated at higher amount, For EPS, we will take 15000 limit only
Remaining amount wil go to Difference
Question 1
| Particulars | Case 1 | Case 2 |
| Basic | 5000 | 50000 |
| DA | 1000 | 10000 |
| Special Pay | 4000 | 40000 |
| Total | 10000 | 100000 |
Calculate the following
| Particulars | Case 1 | Case 2 |
| Gross Salary | ||
| EPF | ||
| EPS | ||
| Difference | ||
| Total ER contribution | ||
| Net Salary | ||
| EPF Wages | ||
| EPS wages |
View answer
| Particulars | Case 1 | Case 2 |
| Gross Salary | 10,000 | 100000 |
| EPF | 720 | 7200 |
| EPS | 499.8 | 1249.5 |
| Difference | 220.2 | 5950.5 |
| Total ER contribution | 720 | 7200 |
| Net Salary | 9280 | 92800 |
| EPF Wages | 6000 | 60000 |
| EPS wages | 6000 | 15000 |
Question 2
What is EPF Wages?
View answer
EPF wages mean amount on which EPF is to be calculated i.e. Basic + DA
Question 3
What is EPS Wages?
View answer
EPS wages means amount on which EPS is to be calculated i.e. (Basic+DA) or 15000 whichever is Minimum
Other Charges Paid by Employer
Note:-Total here means total of all employees
What are PF Admin Charges?
View answer
Normally whole share of Employee and Employer PF (EPF, EPS and Difference) is deposited with PF Department in Employee A/c
Whole amount is recovered on retirement of Employee or as pension
To cover salary and office expenses of PF Department, PF Admin Charges are also recovered from the employer
It is 0.5%*EPF WAGES
(There is no limit of 15000)
Minimum PF Admin Charges are 500 per month for all employees
It is to be paid only by Employer and not Employee
What are EDLI Charges and EDLI Admin Charges?
View answer
EDLI means Employee Deposited Linked Insurance
It is a kind of life insurance scheme in which on death of employee, beneficiary gets a lumsome amount
Employer has to Pay EDLI Charges @ 0.5% of EPS Wages
(Note-EPS Wages =basic+da or 15000 which is minimum)
EDLI Admin Charges
Earlier Employer also had to pay EDLI Admin Charges @ 0.01% of EPS Wages (Min 200),now these are totally exempted from 1/4/2017
Minimum PF
Note- Some Companies Pay Minimum PF on 15000 only
If Basic + Da is 20000(more than 15000), do Employee and Employer have to pay PF on 15000 or 20000?
View answer
Legally, Employee and Employer are liable to Pay PF on Max 15000 only
Employee Contribution
EPF=12% *15000=1800
Employer Contribution
EPS=8,33%*15000=1250
Difference=1800-1250=550
Total Employer=1800
However, in Many Companies, Employee and Employer are Paying PF on higher amount of 20000
View answer
Employee Contribution
EPF=12% *20000=2400
Employer Contribution
EPS=8,33%*15000=1250
Difference=2400-1250=1150
Total Employer PF=1250+1150=2400
Note-
Even if PF is calculated at higher amount, For EPS, we will take 15000 limit only
Remaining amount wil go to Difference
Is EPF Rate Always 12%?
View answer
No
EPF Rate is 10% in following cases
- If there less than 20 employees
- In case of Jute/Bedi/Brick/Coir/Guar gum Factories
- Sick Industrial Company
- Loss Making Company(Total Losses are more than Net Worth of Company
What are the rules of PF for Workers Employed abrading Foreign Countries?
View answer
In PF, he is called international worker
PF is to be deposited for international workers also
However, max limit of 15000 is not available,
Example
Suppose Employee has Salary of 20000, both Employee and Employer has to pay PF on 20000
They cannot pay PF on lower limit of 15000
In what cases EPS is not applicable
View answer
EPS is not applicable in case
Person is more than 58 years of age and in job
Person was receiving pension, later he re-joins company
In this case, whole amount is deposited in Difference Head