Provident Fund (PF)

Employees’ Provident Fund is a small saving scheme that is offered to Indian workers as well as international workers through the EPFO of India. The scheme allows accumulation of funds as well as accrual of interest on the accumulated funds. The funds thus collected are made of contributions partly from employees and partly from their employers.

Contributions from employees as well as employers add to the EPF. However, unlike what is commonly thought to be, the entire portion of contribution from an employer doesn’t go exclusively towards the Employees Provident Fund.

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PF Contribution

Provident Fund Contribution from both employee & employer

  1. Contribution by an employee: Contribution towards EPF is deducted from employee’s salary i.e., 12% of basic salary and PF applicable allowances of the employee
  2. 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
    • 0.5% of contribution towards EPF Administration Charges
    • 0.5% of contribution towards EDLI Administration Charges
    • 8.33% of contribution towards Employees’ Pension Scheme

Provident Fund scheme will be calculated upto INR 15,000 of the basic salary and PF applicable allowances. If the basic is above INR 15,000 PF will be constant. The employee with a monthly salary less than or equal to INR 15,000 will have to contribute mandatory towards EPF

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