Calculating PF Deduction

The Provident Fund Scheme was introduced with an idea to take care of all the employees
during their retirement periods. As per rules laid down by the EPFO, the employee contributes
about 12% of his basic salary towards this scheme and an equal amount is contributed by his
employer. To be eligible to be a member of the PF scheme, an employee’s monthly income
should not exceed Rs. 15,000/- per month. However, any employee with a salary range above
Rs. 15,000/- can also contribute to the scheme with the consent of his employer. For PF
deduction too, the maximum salary range is Rs. 15,000/-
As per the rules laid down by the EPFO, even if the employee’s salary is beyond Rs. 15,000/-,
the employer can deduct his PF contributions only on Rs. 15,000/-.

The basic rules laid down by the EPFO for PF Deductions in a nut shell are,

 EPF act applies to factories and establishments having 20 or more employees.
 All employees earning basic salary + DA up to Rs. 15000 p.m are eligible for PF.
 Employee & Employer contribution is 12% each of Basic salary +DA.The
contribution by employer & employee are payable on maximum wage ceiling of
Rs. 15000.
 The Employee can pay at higher rate, if his employer has no obligation to pay at
such higher rate.
 For international worker, the ceiling limit of Rs. 15,000 is not applicable.
 The due date for monthly PF return is 25 th of following month, which is filed

The interest calculated on the PF amount at present is 8.65% on EPF contributions made by the
employer and the employee. The calculation of the actual interest received depends upon the
salary of employee and also on the break-up of employer's PF contribution.
The employee can check for the balance amount in his PF account, every month, to ensure that
his PF deduction is promptly handled by his employer. He can do this in four different ways.
 By using the EPFO Portal and his universal account number
 By sending an SMS to an authorized EPFO contact number
 By visiting the EPFO app
 By giving a missed call on the designated landline number though his registered mobile

Ensuring an employee’s contribution to his PF account is a responsibility of paramount
importance to both the employer as well the EPFO. A prompt deduction of the amount towards
PF and crediting the amount into the employee’s account along with the company contributions
is vital. Any violations towards this responsibility by the employer can attract legal action by the

The EPFO has extended an olive branch to all its employees through Provident Fund Schemes
and Prompt contributions by the employer by deducting Provident Fund can only ensure the
branch is strong and stable.