Introduction
Calculating the Provident Fund (PF) of a basic salary more than 15000 can be a daunting task. It is important to understand the rules and regulations of the Employees’ Provident Fund Organisation (EPFO) before attempting to calculate the PF. This article will provide a step-by-step guide on how to calculate the PF of a basic salary more than 15000. It will also provide an overview of the EPFO rules and regulations, as well as the different types of PF contributions. By the end of this article, you should have a better understanding of how to calculate the PF of a basic salary more than 15000.
How To Calculate PF Of Basic Salary More Than 15000
The Employees Provident Fund (EPF) is a retirement savings scheme for employees in India. The EPF contribution rate is 12% of the basic salary, with 8.33% of the contribution going to the employee’s EPF account and the remaining 3.67% going to the employee’s Pension Scheme (EPS).
For basic salaries above Rs. 15,000, the employer’s contribution to the EPF is restricted to Rs. 1,250 per month. This means that the employee’s contribution to the EPF will be 8.33% of the basic salary minus Rs. 1,250.
For example, if the basic salary is Rs. 20,000, the employee’s contribution to the EPF will be 8.33% of Rs. 20,000 minus Rs. 1,250, which is Rs. 1,416.67.
Employees whose monthly salary (basic wage + dearness allowances) is 15000 or below are eligible for the EPF scheme. For employees whose salary is above 15000 then the PF contribution is calculated up to 15000 only.
If employee wants to contribute more amount then he can contribute under voluntary PF contribution, but employer doesn’t have any obligation to calculate PF contribution on increased salary.
PF Deduction on Salary above 15000
If the salary ( basic wage + DA) of an employee is 15000 from the starting date of his joining then it is not mandatory to deduct PF from his salary.
If the employee salary increases to above 15000 due to salary hike and if he is previously an EPF member then he should continue making PF contribution. And the PF is calculated on 15000 only.
For more details read this topic on Is It Mandatory to Deduct PF from Salary More than 15000
How to Calculate PF on Basic Salary More than 15000 in Normal Case
To calculate PF of basic salary of more than 15000 Rs follow the below calculation process. Here I have taken an example of an employee whose basic wage + DA is 18000 Rs. Lets see how PF is calculated on 18000.
| Basic Salary + DA | Employee & employer contribution on : 15000 Rs |
|
| Employee PF Contribution | 12% | 1800 Rs |
| Employer PF contribution | 3.67% | 550 |
| Employer Pension contribution | 8.33% | 1250 |
If Employee wants Contribute Under Voluntary PF Contribution
If that employee wants to pay a voluntary PF contribution then the calculation will be like this. (Here employee contribution is calculated on 18000 and employer contribution is calculated on 15000)
| Basic Salary + DA | Employee Contribution on : 18000 Rs Employer contribution on : 15000 Rs |
|
| Employee PF Contribution | 12% | 2160 Rs |
| Employer PF contribution | 3.67% | 550 |
| Employer Pension contribution | 8.33% | 1250 |
If Employer also Wants to Contribute Under Voluntary PF Contribution
In the above salary example, employee PF contribution is calculated on 18000 but employer pension contribution is calculated on 15000 (ceiling wage limit).
And employer PF contribution = (Employee PF contribution – Employer PF contribution)
⟣ Here we are not considering 3.67% calculation of employer PF contribution.
| Basic Salary + DA | Employee contribution on : 18000 Rs Employer pension contribution on : 15000 Rs |
|
| Employee PF Contribution | 12% | 2160 Rs |
| Employer Pension contribution | 8.33% on 15000 /- | 1250 |
| Employer PF contribution | 2160-1250 | 910 |
Note: When you use ECR excel it will be calculated automatically. We just need to enter the basic salary of the employee.
Also Read
How To Calculate PF Of Basic Salary More Than 15000
Calculating the Provident Fund (PF) of a basic salary more than 15000 is a simple process. The PF is calculated as a percentage of the basic salary and is deducted from the employee’s salary every month. The amount of PF deducted depends on the basic salary and the employer’s contribution. Here is a step-by-step guide on how to calculate the PF of a basic salary more than 15000.
Step 1: Calculate the Employee’s Contribution
The employee’s contribution to the PF is 12% of the basic salary. This means that if the basic salary is more than 15000, the employee’s contribution will be 12% of 15000, which is 1800. This amount is deducted from the employee’s salary every month.
Step 2: Calculate the Employer’s Contribution
The employer’s contribution to the PF is 3.67% of the basic salary. This means that if the basic salary is more than 15000, the employer’s contribution will be 3.67% of 15000, which is 550. This amount is added to the employee’s contribution and is also deducted from the employee’s salary every month.
Step 3: Calculate the Total PF Contribution
The total PF contribution is the sum of the employee’s contribution and the employer’s contribution. In this case, the total PF contribution is 1800 + 550 = 2350. This amount is deducted from the employee’s salary every month.
Step 4: Calculate the Net Salary
The net salary is the amount of salary that the employee receives after the PF contribution has been deducted. In this case, the net salary is 15000 – 2350 = 12650. This is the amount that the employee receives every month.
Conclusion
Calculating the PF of a basic salary more than 15000 is a simple process. The employee’s contribution is 12% of the basic salary and the employer’s contribution is 3.67% of the basic salary. The total PF contribution is the sum of the employee’s contribution and the employer’s contribution. The net salary is the amount of salary that the employee receives after the PF contribution has been deducted.
