According to the PF Act, 12% of your PF Salary will go towards the Provident Fund. The company is also required to contribute the same 12%, out of which 8.33% would go towards the Employee Pension Scheme or EPS, and the remaining 3.67% is credited into the PF Account.
The monthly contribution is restricted to the PF Salary of INR 15,000/.
We need to set up the rules to ensure the correct PF contribution is calculated from both the employer and employee as per the Provident Fund Rules.
PF Calculation on Non- restricted wages will be:
12 % of Basic + DA
PF calculation on Restricted Wages will be:
If Basic + DA > 15000, PF = 12 % of 15000
b. If Basic + DA < 15000, PF = 12 % of (PF Wages or INR 15000 whichever is lower).
For international workers (IW), the wage ceiling of Rs 15,000 is not applicable.
To configure the Rules:
On the Home Page click “Compliance”.
Click “Provident Fund” under “Compliance”.
Click “PF Rules” under “Configuration, Settings”.
Select the “Effective Date”.
Enter the “Statutory Restricted Wages Limit (Rs)”- This filed is auto-populated with the maximum ceiling of INR 15,000/-
“Employee PF Contribution Rule” – Select “Contribute on Restricted Wages” or “Contribute on Actual Wages” from the drop-down.
Select the “Employer PF Contribution Rule” from the drop-down.
- Match Employee Contribution – Employer contribution will be equal to the contribution made by the employee.
- Contribute of Restricted Wages – Contribution will be calculated based on the Restricted PF Salary
- Contribute on Actual Wages – Contribution will be calculated based on the Actual PF Salary
- Contribute Employee wise – Here the employer contribution will differ based on the individual employee’s selection of contribution -either Restricted or Actual.
Advanced PF Settings
Check the box “Include Admin Charges in CTC”- If you want to include the PF Admin charges as part of CTC.
“Override Default EDLI calculations” – The system will calculate the EDLI at 0.50% of Restricted Wages. If you wish to contribute at a different rate, pl check this box and enter the
- EDLI Charges and
- EDLI Admin Charges
For further details on EDLI, click here.
Click “Save”.
The video outlining the process is attached for your reference.