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, please 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.