Provident Fund Calculation


The Provident Fund Calculation is as follows:

1- In an employee’s provident fund account, every employer has his/her own account on which both employer and employee will contribute.

2- The rate of contribution of employer is 12% of the salary of employee, out of which 8.33% is diverted to employees provident fund account.

3- Employee also needs to pay 12% of his/her salary amount.

4- Employer is also required to pay a contribution of 0.5% of the emoluments towards EDLIS’1976.

5- An employer is required to pay administrative charges at 1.10% of emoluments towards provident fund charges and 0.01% towards EDLI Scheme 1976.

6- Interest will be paid to the account of employees at the government rate which is now running @ 8.5% per annum.

7- If employees want to contribute more than 12% of his salary on his/her account, the law allows employees to do so, but the employer contribution is limited to 12%.

8- Interest accumulated on the EPF account is exempted from income tax.

9- Partial withdraw is allowed to employees on special occasion.

10- Total payment will be paid to the employee or his/her nominee in case of retirement, permanent disablement, death in service or early retirement.

Presently the following three schemes are providing to employees under this act.

Employee provident fund scheme (EPF) 1952.
Employees’ pension scheme (EPS) 1995
Employees deposit linked insurance (EDLIS) 1976.

An establishment with 20 or more workers should register with Employees provident fund organization which comes under any of the 180 industries mentioned. Even though there are certain exemptions are there will be discussed in another post. Here we mainly aimed for EPF rates and its calculation.

EPF, EPS, EDLI Rates in India

EPF, EPS and EDLIS are calculated on Basic salary, dearness allowances, cash value of food concession and retaining allowances if any.

“Retaining allowances means an allowance payable for the time being to an employee of any factory or other establishment during any period in which the establishment is not working, for retaining his services.”

Most of the organizations are following Basic+ DA Method. Below table tells you the rates of contribution of EPF, EPS, EDLI, Admin charges in India.

Scheme Name
Employee contribution
Employer contribution
Paid to A/c No
EPF
12%
3.67%
1
EPS
0
8.33%
10
EDLI
0
0.5%
21
EPF Admin Charges
0
1.1%
2
EDLI Admin charges
0
0.01%
22

Inspection charges payable by employer: Inspection charges must be paid by the employer in the following Cases. Some establishment are exempted from EDLI contribution as they are providing the same nature of benefit without any contributions from employee, such establishments are liable to pay 0.005% on Basic salary. The establishments exempted under the scheme should pay 0.18% of Basic salary towards inspection charges.

EPF Ceiling Limit: EPF ceiling limit is fixed to 6500/-.The employer is liable to pay contribution only on 6500/- Whatever is the basic salary.

Calculation of Employees Provident Fund: Let us calculate the contribution of an employee who is getting a basic salary of Rs 3500/-.

Contribution Towards
Calculation
Amount
EPF Employees share
3500 x 12%
420
EPS Employer share
3500 x 8.33%
292
EPF Employer 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 ( round up to Rs 1/-)

The above calculation is easy and thereon complication. Calculation of EPF for employees getting a basic salary over and above the ceiling limit 6500/-. In such cases companies uses different method for calculation as per their pay roll policy. Consider an employee getting a basic salary of 7500/-. We can calculate it in different ways. The only thing you should take care is, EPS is calculated only up to 6500/- that means the maximum amount is fixed to Rs 541.00. The three methods mentioned below are based on the above example.

Method-1

If your company consider total basic salary above the limit fixed 6500.00 for PF calculation:

Contribution Towards
Calculation
Amount
EPF Employees share
7500 x 12%
900
EPS Employer share
6500 x 8.33%
541
EPF Employer share
7500 x 12% (-) 541
359
EDLI charges
6500 x 0.5%
32.5
EPF Admin charges
6500 x 1.1%
71.5
EDLI Admin charges
6500 x 0.01%
0.65 (Round up to Rs 1/-)

I will explain how Employer contribution of EPS and EPF is calculated.

Employer is decided to contribute on total basic salary which is 12 % on 7500.00 equal to 900.00

EPS Share is fixed to 541.00

Balance (900-541) goes to EPF account 359.00

Total share 900.00

Out of Rs 900.00 EPS share is RS 541/- which is fixed for a basic salary greater than 6500/-. The balance amount is 900-541 = 359.00 which will go to EPF account.

You may be thinking that, what about 3.67%?, Here you don’t need to care about it.

Method2

Some companies follows the below method in which employee share is calculated on 7500/- and employer share is calculated on up limit Rs 6500/-

Contribution Towards
Calculation
Amount
EPF Employees share
7500 x 12%
900
EPS Employer share
6500 x 8.33%
541
EPF Employer 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 (Round up to Rs 1/-)

Method3

Some are calculating both employer and employee shares on 6500/- in spite of higher basic salary than 6500.00

Contribution Towards
Calculation
Amount
EPF Employees share
6500 x 12%
780
EPS Employer share
6500 x 8.33%
541
EPF Employer 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 (Round up to Rs 1/-)

Remittance of contribution

It is the duty of employer to remit the contribution deducted to the government before 15th of the following month.

Employer interest Liability

Employers are liable to pay @12% interest on late payment of EPF, EPS, EDLI, Administrative charges

Damage liability

An employer is remitting EPF, EPS, EDLI, and Admin charges late shall be liable to pay damages as penalty ranging from 17% to 37% depending up on delay.

I don’t think the above post is a complete one, if you have different opinion and experience we can discuss it in our comment section that will make this post a complete one.

In the meantime you can Subscribe our Latest News to stay updated with us. Else you can check your Provident Fund Status with us.

4 comments:

Provident Fund Status said... Provident Fund Status[Reply to comment]Provident Fund Status

EPF: Provident fund is calculated @ 12% on the basic salary, which indeed is deducted from Employee's salary and the same plus 12% on the basic is contributed by the employer. So the aggregate 12% + 12% is remitted to the Provident fund Department

ESI: Employee State Insurance is calculated at 1.75% on the gross salary of the employees whose salary is below Rs. 10000/-per month (w.e.f 2008) and Employer contributes 4.75% on the gross salary of the employee and the aggregate 1.75% + 4.75% is remitted to the ESI Department

VAT : VAT percentage is 1, 4, 12.5%. It is a tax which is charged on the basic value of the product by the seller from the buyer and the same is remitted to the Sales Tax Department. For eg if the product value is Rs. 100 and the tax applicable is 4%, in such case a bill is raised for Rs. 104.

SALES TAX: Same as VAT

Sonu Kumar said... Provident Fund Status[Reply to comment]Provident Fund Status

Hi,

This is my PF number PF no - KN/BN/342/34272/376999 and which has been submitted on last month of april for withdrawal. But till date it is not yet credited. Please update me.

Thanks!
~Sonu Kumar
+91-9582107022

Amit Saini said... Provident Fund Status[Reply to comment]Provident Fund Status

Hi ,

I am amit saini , I have applied for pf withdraw l but still it is not credited ... my pf no is DL/CPM/21959/2226. PLZ update me the status....


Thanks
Amut saini
contact no . 9023750790 &

Mail id amit.sainiptk@yahoo.in

Amit Saini said... Provident Fund Status[Reply to comment]Provident Fund Status

Hi

I have submited pf withdrawl form last august 2013. But still it is not credited. My pf no is DL/CPM/21959/2226. PLZ update the status.

Thanks
Amit saini
9023750790
Amit.sainiptk@yahoo.in

Post a Comment

Related Posts Plugin for WordPress, Blogger...

If you want to ask any Question, you may want to subscribe to our RSS feed or email updates. | Thanks for visiting!

 
x

Get Provident Fund Status Posts Via Email - It's Free

Email rss