Dear Rahul,
EPF Ceiling Limit:
EPF ceiling limit is fixed at 6500/-. The employer is liable to pay contributions only on 6500/-, regardless of the basic salary.
Calculation of Employees' Provident Fund:
Let us calculate the contribution of an employee receiving 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 (rounded up to Rs 1/-) |
The calculation above is straightforward with no complications.
Calculation of EPF for employees receiving a basic salary exceeding the ceiling limit of 6500/- involves different methods based on the company's payroll policy.
Consider an employee with a basic salary of 7500/-. The calculation methods are as follows, ensuring EPS is calculated only up to 6500/- with a maximum amount of Rs 541.00.
Method-1: If your company considers the total basic salary above the fixed limit of 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 | 7500 x 0.5% | 38 |
| EPF Admin charges | 7500 x 1.1% | 83 |
| EDLI Admin charges | 7500 x 0.01% | 0.75 (Rounded up to Rs 1/-) |
In Method-1, the employer contribution of EPS and EPF is explained.
Employer contribution on the total basic salary of 7500.00, which is 12%, amounts to 900.00. EPS Share is fixed at 541.00, with the balance of 359.00 going to the EPF account. The 3.67% does not need consideration here.
Method-2: Some companies calculate employee share based on 7500/- and employer share on the upper limit of 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 (Rounded up to Rs 1/-) |
Method-3: Some calculate both employer and employee shares on 6500/- despite a higher basic salary.
| 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 (Rounded up to Rs 1/-) |
Detailed Accounts under PF:
There are five accounts:
1) AC 1 (PF)
(BA+DA) 12% -> Employee share
(BA+DA) 3.67% -> Employer share
2) AC 10 (Pension)
(BA+DA) 8.33% -> Employer share
3) AC 2 (Administration Charges)
(BA+DA) 1.1% -> Employer share
4) AC 21 (EDLI - Employees' Deposit Linked Insurance)
(BA+DA) 0.5% -> Employer share
5) AC 22 (EDLI Administration charges)
(BA+DA) 0.01% -> Employer share
Regards,
Boopathi.
From India, Coimbatore
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EPF Ceiling Limit:
EPF ceiling limit is fixed at 6500/-. The employer is liable to pay contributions only on 6500/-, regardless of the basic salary.
Calculation of Employees' Provident Fund:
Let us calculate the contribution of an employee receiving 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 (rounded up to Rs 1/-) |
The calculation above is straightforward with no complications.
Calculation of EPF for employees receiving a basic salary exceeding the ceiling limit of 6500/- involves different methods based on the company's payroll policy.
Consider an employee with a basic salary of 7500/-. The calculation methods are as follows, ensuring EPS is calculated only up to 6500/- with a maximum amount of Rs 541.00.
Method-1: If your company considers the total basic salary above the fixed limit of 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 | 7500 x 0.5% | 38 |
| EPF Admin charges | 7500 x 1.1% | 83 |
| EDLI Admin charges | 7500 x 0.01% | 0.75 (Rounded up to Rs 1/-) |
In Method-1, the employer contribution of EPS and EPF is explained.
Employer contribution on the total basic salary of 7500.00, which is 12%, amounts to 900.00. EPS Share is fixed at 541.00, with the balance of 359.00 going to the EPF account. The 3.67% does not need consideration here.
Method-2: Some companies calculate employee share based on 7500/- and employer share on the upper limit of 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 (Rounded up to Rs 1/-) |
Method-3: Some calculate both employer and employee shares on 6500/- despite a higher basic salary.
| 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 (Rounded up to Rs 1/-) |
Detailed Accounts under PF:
There are five accounts:
1) AC 1 (PF)
(BA+DA) 12% -> Employee share
(BA+DA) 3.67% -> Employer share
2) AC 10 (Pension)
(BA+DA) 8.33% -> Employer share
3) AC 2 (Administration Charges)
(BA+DA) 1.1% -> Employer share
4) AC 21 (EDLI - Employees' Deposit Linked Insurance)
(BA+DA) 0.5% -> Employer share
5) AC 22 (EDLI Administration charges)
(BA+DA) 0.01% -> Employer share
Regards,
Boopathi.
From India, Coimbatore
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Dear Mr. Boopathi,
Please let me know the maximum basic for PF. For example, one of our employee's basic is Rs. 21,000. We deduct 12% PF on Rs. 21,000, which amounts to Rs. 2,520, and the employer also calculates based on Rs. 21,000.
Is this correct? Someone mentioned that the maximum basic for PF is Rs. 20,000. Is it true?
Thank you.
From India, Madras
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1Please let me know the maximum basic for PF. For example, one of our employee's basic is Rs. 21,000. We deduct 12% PF on Rs. 21,000, which amounts to Rs. 2,520, and the employer also calculates based on Rs. 21,000.
Is this correct? Someone mentioned that the maximum basic for PF is Rs. 20,000. Is it true?
Thank you.
From India, Madras
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Wage-ceiling-ep f-6500-15000-ci rcular-circular .pdf
PROVIDENT FUND CALCULATION.xls