PF contribution is a deduction of a certain amount from the employee salary towards the EPF account and is an integral part Employees Provident Fund or EPF and is a compulsory scheme for employees working in any establishment of government or private are required to register with equal contributions from their company. EPF scheme is introduced by EPFO employee provident fund organization and which also administers employees pension payment in their retirement period. EPF scheme is a social security measure taken by the government of India to enable citizens or working employees to save a certain amount at their retirement phase.
PF contribution by employer is 12 % but it is divided to contribute towards not only EPF but also towards the other schemes PF contribution by employer is also called as ER amount below are the ratio in which employers ER ratio is calculated only 3.67% which is lower land employee share toward the EPF scheme.
● Employee Provident Fund (EPF) – 3.67%
● Employee Pension Scheme (EPS) – 8.33%
● Employee Deposit Link Insurance Scheme (EDLIS) – 0.50%
● EPF Admin Charges – 1.10%
● EDLIS Admin Charges – 0.01%
PF contribution of employee and employer both of them contribute 12% towards PF. 12% of the employee (basic salary plus allowances) into employee EPF account .PF contribution of the employee is 12% from basic salary it also called as EE amount
Certain contributions are made from the employee salary/wage such as
● Income tax
● Provident fund contribution
● Medical insurance ESI to get medicines at low rates
● Cafeteria contribution
● Contribution for facilities provide under transport
● Leave contributions these are called unpaid leaves
● Professional tax
PF contribution is the major contribution from employee salary in all the above contributions.The current interest rate is 8.65% EPF contributions made by the employer and the employee. The calculation of interest relies on the salary of the employee and on the share of employer contribution to PF.
● EE amount (PF contribution employee) = 12% basic pay + DA
● ER amount (employer contribution to PF) = 12% basic pay- 8.33%
● PF contribution=Adding EE amount + ER amount
EE Amount is The PF contribution of employee i.e. employee total contribution in the EPF account. The sum total of PF amount contributed towards PF monthly from employee salary.ER Amount is the employer PF contribution to PF i.e. establishment contributions which employee is employed. It is the total of PF amount monthly contributed into employee EPF account by the employer.
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