Provident Fund (PF)

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. 

Division of funds as of November 2015

  1. 12% of Basic Salary of Employee goes directly towards Employees’ Provident Fund.
  2. 13.15% of Basic Salary of Employer is divided as follows –
    • 3.67% of contribution towards Employees’ Provident Fund
    • 0.5% of contribution towards EPF Administration Charges
    • 0.65% of contribution towards EDLI Administration Charges
    • 8.33% of contribution towards Employees’ Pension Scheme

Minimum salary limits: Employees with monthly salaries less than or equal to INR 15,000 now have to contribute mandatorily towards EPF. PF amount is calculated for the basic amount. PF will be calculated as 12% of the basic.

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