My Institution has around 90 branches in the State. The Provident Fund system is centralized at Head Office - meaning thereby, Provident Fund Deducted on Salaries of employees working in Branches is remitted through Debit Notes at Head Office, where the same is accummulated in their accounts. Along-with the above PF accounting for Head Office employees is also done. Monthly Salary of employees working in Head Office is paid by 25th of the month (5-6 days in advance) whereas for Branches it is variable i.e. by 7th of next month. The Provident Fund amount of all the employees (Head Office & Branches) is transferred in their respective accounts by 15th of next month by posting of voucher. Now, my question is - Under Employees Provident Fund Act, 1952 - How is PF Interest to be calculated on the monthly running balance - whether interest for the current month (voucher posting month) is to considered or preceeding month ( salary month) ? Kindly explain with some example.
From India, Chandigarh
1From India, Chandigarh
The Rules for PF is as Follows
1. Companies can give PF based on the Gross Salary Drawn
2. Limited PF: Which is restricted to Basic and DA
The interest for PF is computed on a Reducing Balance method
12% from the Employee
12% from the Employer
From the Employer's Contribution, a part of the fund is contributed to Employee Pension Scheme (EPS)
Calculation for EPS
1. Rs.6500 * 8.33% (6500 is the maximum ceiling for PF) , this is equal to Rs.541
2. If the Basic+DA is lesser than 6500 then the sum of the two * 8.33%
Whichever is lesser, that amount is contributed to EPS and the Rest id taken to the EPF Account
Interest is Calculated on a monthly basis using the Reducing Balance Method
1. Companies can give PF based on the Gross Salary Drawn
2. Limited PF: Which is restricted to Basic and DA
The interest for PF is computed on a Reducing Balance method
12% from the Employee
12% from the Employer
From the Employer's Contribution, a part of the fund is contributed to Employee Pension Scheme (EPS)
Calculation for EPS
1. Rs.6500 * 8.33% (6500 is the maximum ceiling for PF) , this is equal to Rs.541
2. If the Basic+DA is lesser than 6500 then the sum of the two * 8.33%
Whichever is lesser, that amount is contributed to EPS and the Rest id taken to the EPF Account
Interest is Calculated on a monthly basis using the Reducing Balance Method
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PF INTEREST CALCULATION SHEET.xls