Breakup of EPF Contribution
The Employees' Provident Fund(EPF) is one of the most popular investment options in India.
In this, both the employer and the employee contribute 12% of the employee's basic salary to the fund to create a corpus for the future. The current rate of interest (for FY2023-24) is 8.25%.
Given below is the breakup of the EPF contribution:
Contribution Towards | Employee's Contribution (%) | Employer's Contribution (%) |
EPF | 12/10 | Difference between pension contribution and EE share |
EPS | 0 | 8.33 |
EDLI | 0 | 0.5 |
Employees will pay 10% of their basic salary towards EPF under the following conditions:
- The company they are working for has less than 20 employees.
- The Board for Industrial and Financial Reconstruction has declared the company as a sick industrial company.
- If the company at the end of the financial year has accumulated losses which are equal to or more than the worth of the company.
- Any Guar gum factories, coir, beedi, and jute industries.
Contribution for EPF
- If the maximum wage ceiling is Rs.15,000, contributions are mandatory.
- If the employer pays a higher amount, the employer does not have to pay a higher rate as well.
- A joint request from the employer and employee must be given in order to make a higher contribution. If the employer makes a higher contribution, administrative charges are applicable.
- The maximum wage ceiling of Rs.15,000 is not applicable for international workers.
Contribution for EPS
- The employee does not have to make any contribution towards EPS, only the employer makes a contribution towards EPS.
- No EPS contribution is required when the individual crosses the age of 58 years and still in service or when the individual has re-joined as an employee after drawing a Reduced Pension. In both cases, the pension contribution of 8.33% made by the employer goes towards PF.
- From 11 September 2010, the higher wage ceiling of Rs.15,000 is not applicable for international workers.
- If a member joins after reaching 50 years of age and is not a pensioner, he or she will not get an option of not receiving the pension contribution on the grounds that he or she will not complete the minimum service of 10 years. However, until he or she is a member, a social security cover is provided.
Contribution for EDLI
- If the maximum wage ceiling is Rs.15,000, contributions must be made even if the contribution towards PF is made on higher wages.
- Contributions are always rounded off to the nearest rupee.
- Even if the individual crosses the age of 58 years old and no pension contribution is made, EDLI contribution must be made. Contribution towards EDLI is made as long as PF contribution is made, and the member is employed.
FAQs on Breakup of EPF Contribution
- Are employers allowed to deduct their share of contribution from the employees' wages?
No, employers are not allowed to deduct their share of contribution from the wages of employees. It is a criminal offence if any such deduction is done.
- If an employee is paid on daily basis how is the contribution determined?
The contribution is determined based on the wages paid in a calendar month.
- If an employee, during his or her suspension, is paid subsistence, is PF contribution payable?
No, PF contribution is not payable under such circumstances.
- After leaving service, can the employee contribute to EPF?
No, the employee cannot contribute towards EPF under such circumstances as the member's and employer's contribution should match.
- What are the measures by which the PF amount is recovered from an employer who is defaulting?
Realisation of dues from Debtors, Arrest and Detention of employer, Prosecution under section 14 of the EPF & MP Act, 1952, Attachment of Bank Accounts, Attachment & Sale of properties, Action under Section 406/409 of Indian Penal Code and Section 110 of Criminal Procedure Code.
- Can a member pay a contribution more than 12% statutory rate?
Yes, the member can pay voluntary contribution of more than his or her 12% of Rs.15,000.
- What is the age limit for Provident Fund withdrawal?
The member has to wait for two months for PF withdrawal in case of resignation from service.
- Who should the employee contact in case he/she is not given PF membership?
The employee can approach the Regional Provident Fund Commissioner of the nearest PF office if his/her employer fails to provide membership.
- Can an apprentice become a member of the EPF?
No, an apprentice cannot become a member of the EPF.
- Can an employer also join the PF?
No, an employer cannot join the PF.
- Is it possible for a pensioner to get pension anywhere in the country?
Yes, it's possible for the pensioner to get pension anywhere in the country.
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