Calculate the optimum contribution to Provident Fund(PF) account
The employee contributes 12 percent of his or her basic salary along with the Dearness Allowance every month to the EPF account. For example: If the basic salary is Rs. 15,000 per month, the employee contribution shall be 12 % of 15000, which comes to Rs 1800/-.
How is PF contribution calculated?
For employees who receive wages/salary of RM5,000 and below, the portion of employee’s contribution is 11% of their monthly salary while the employer contributes 13%. For employees who receive wages/salary exceeding RM5,000 the employee’s contribution of 11% remains, while the employer’s contribution is 12%.
How much is PF contribution?
EPF Contribution
| Contribution by | Monthly Percentage Contributed |
|---|---|
| Employer | 12% |
| Employee | 12% or 10% |
| Total | 24% |
What is the maximum limit of PF contribution?
The total contribution i.e., voluntary + mandatory can be up to Rs. 15,000 per month. The member can also contribute on higher wages i.e., greater than Rs. 15,000 but only up to a maximum limit of 100% of the PF wages, provided they get permission from the APFC/RPFC as per the provisions of para-26(6) of the scheme.
What is PF contribution in EPF?
As mentioned above, both employer and employee have an equal contribution towards the employee provident fund. The actual amount to EPF contribution is calculated based on the employee’s basic salary and dearness allowance. For most employees, the PF contribution is 12% of the basic salary.
How basic salary is calculated?
Ideally, they use a reversed calculation method where a percentage of the salary and CTC is taken. The basic pay is usually 40% of gross income or 50% of an individual’s CTC. Basic salary = Gross pay- total allowances (medical insurance, HRA, DA, conveyance, etc.)
Is PF mandatory above 15000?
If you are drawing a salary higher than Rs. 15,000 per month, you are termed a non-eligible employee and it is not mandatory for you to become a member of the EPF, although you can still register with the consent of your employer and approval from the Assistant PF Commissioner.
Is employer contribution 13% in PF?
Contribution by an employer: The contribution made by the employer is 13% of the basic salary and PF applicable allowances of the employee. However this 13% is further subdivided into: 3.67% of contribution towards Employees’ Provident Fund.
How calculate PF if salary is less than 15000?
If the basic pay is less than Rs 15000 then 8.33% of that full amount will go into EPS. For the PF deduction, the maximum limit of salary of the employee is Rs 15,000 per month. This means that even if the employee’s salary is above Rs 15,000, the employer is liable to contribute only on Rs 15,000 that is Rs 1,800.
Can employer contribute more than 12% for PF?
The EPFO allows an EPF or PF account holder to opt for the VPF and invest beyond 12 per cent of its basic salary in one’s provident fund account. However, for this VPF contribution made by the employee, the employer will not contribute any additional amount.
What is the salary limit for PF 2021?
To widen the Employees’ Provident Fund (EPF) coverage, the labour ministry is likely to raise the wage ceiling for mandatory EPF benefit to Rs 21,000 a month from Rs 15,000 now.
How many percent does employer contribute to EPF?
When you contribute 11% of your monthly salary to the EPF, your employer will contribute another 12% or 13% of your salary (the statutory contribution rate is subject to changes by the government) to your EPF savings. However, either you or your employer or both may contribute at a rate exceeding the statutory rates.
Is it good to increase PF contribution?
Contribution to the EPF through the VPF entitles one to a tax benefit under Sec80C of the Income Tax Act. So, if you make a contribution to the tune of Rs 1.5 lakhs, the same could be offered for tax benefit under Sec80C of the IT Act.
Is High PF better than low PF?
For instance, those with a monthly PF salary in the range of Rs 6,500 would take lesser cash home. They would not want a deduction on the maximum component of wages considering the steep rise in cost of living. Hence, a higher PF deduction would push the lion’s share of salaried employees towards significant stress.
Can we reduce PF contribution?
There is no limit to the employees’ contribution to PF, he can contribute up to 100% of his Basic + DA (PF Wages) towards PF, but it must be a minimum of 12 per cent of the same. However, if your employee draws a salary more than Rs. 15,000 per month, then he/she can also choose to not contribute to the Provident Fund.
Why is PF 12%?
According to the EPF scheme rules, the employee contributes 12 per cent of basic wages plus dearness allowance from his salary every month towards his EPF account, and the employer matches the contribution of 12 per cent. So, in total, 24 per cent of the employee’s pay goes towards his/her EPF account.
Is 12 percent PF mandatory?
Currently, the mandatory monthly contribution by the employee stands at 12 per cent of the monthly pay which includes monthly basic pay, dearness allowance and retaining allowance, if any. As an employee, one is allowed to enhance the contribution to up to 100 per cent of the basic pay.
Should I opt for 12% PF?
So, if you are not facing severe cash crunch or have not experienced pay cut, then the additional income from this reduced PF contribution will not be significant for you. It is advised that you stick to 12% contribution which will help your build your retirement fund.
Why is my PF contribution only 1800?
The employers monthly contribution is restricted to a maximum amount of Rs 1,800. Even if the employee’s salary exceeds Rs 15,000, the employer is liable to contribute only Rs 1,800 (12% of Rs 15,000).
Is PF mandatory for salary above 21000?
Under the current rules, any company with more than 20 employees must register with the EPFO and the EPF scheme is compulsory for all employees earning less than ₹15,000. The increase in the limit to ₹21,000 will bring more workers under the retirement scheme.