Hi Can any one suggest how to calculate P.F. contribution of Employee & Employer. if Basic Salary is 85000 per month.

Hi,

Can anyone suggest how to calculate PF contributions for both the employee and employer if the basic salary is 85,000 per month?

Hi SNT,

If the Basic Salary is 85000, then:

- PF Employee Contribution = 85000 * 12% = 10200
- PF Employer Contribution = 85000 * 13% = 11050

Regards,
Niharika

There are two kinds of employers. One set of employers considers PF as an employee benefit. The second set of employers considers it as a statutory obligation. The former, being employee-friendly, will deduct 12% of the entire Salary/Basic salary and contribute the same amount to EPF and Pension fund. The second set of employers will deduct 12% of Rs 15,000 and contribute the same only. Again, there may be yet another kind of employer who will deduct the employees' share based on the actual basic salary, i.e., Rs 85,000 in your case, but will contribute the employer's share only on Rs 15,000.

The benefits:

1. The employee contributing on the full basic salary, i.e., Rs 85,000, will get a very good investment that will provide a reasonably good interest (which no other bank can provide you in the current scenario).
2. If the employer is also contributing his share on the actual salary, i.e., Rs 85,000, the employee MAY get the benefit of higher pension based on that higher amount of PF qualifying salary when he retires at the age of 58. If the review bench strikes down the verdict of the Supreme Court (and of course, the High Court of Kerala) which directs the EPFO to pay a pension based on the actual PF qualifying salary and restricts pension to Rs 15,000, then the employer's share on the difference amount will be credited to the employee's PF. This can be withdrawn by the employee along with his own share of contributions.
3. The employer restricting the PF contribution to 12% of Rs 15,000. The employee gets more take-home salary. But for an employee whose basic salary is Rs 85,000, this is nothing.
4. The employer who allows the employees to contribute on a higher salary than Rs 15,000 will favor the employee with tax benefits under 80CC. To that extent, the employer is employee-friendly.

Hope the above clarifies the matter.

Thank you very much, Madam Niharika and Madhu sir, for sharing your views regarding the P.F. contribution.

Regards,
SNT

Employees can contribute 12% of their basic salary. However, the employer is not obligated to match this contribution at the same level. Instead, the employer's contribution is limited to a maximum of 15k. As mentioned by Madhu, it pertains to benefits, statutory compliance, or related tax exemptions, where the employer has the discretion to decide.

Dear Concern,

Effective from 01/09/2014, the ceiling limit of EPF is INR 15,000. There are two options for calculation:

1) If the employer pays as per the ceiling, i.e., INR 15,000, then the calculation is as follows:
- Employee share = 12% of INR 15,000 = INR 1,800
- Employer share Pension = 8.33% of INR 15,000 = INR 1,250
- The difference is diverted into ER Share PF: INR 1,800 - INR 1,250 = INR 550

2) If the employer pays on the full basic, i.e., from INR 85,000 to PF, the calculation is as follows:
- Employee Share = INR 85,000 * 12% = INR 10,200
- Employer share pension = INR 1,250
- The difference is diverted into ER Share PF: INR 10,200 - INR 1,250 = INR 8,950

I hope the above clarifies your doubts.

So much thanks, Binay and Sujit Sir, for the clarification.

As per the notification on 01 Sep 2014, EPS will apply only to EPF members whose pay at the time of becoming a PF member is not more than Rs. 15,000 per month on or after 01.09.2014. The entire employer and employee contribution shall remain in the provident fund, and no diversion to EPS shall be made for all new PF members on or after 01.09.2014 having a salary more than Rs. 15,000 at the time of joining.

So, you have to check either the member is already registered with some other unit or it is the first time.

Hi,

Please create a comprehensive salary structure for me.

Thank you.