Legal AdviceProvident Fund

How to Calculate PF Amount in Member Passbook?

The Employees' Provident Funds and Miscellaneous Provisions Act of 1952 designates the Employees' Provident Fund Scheme (EPF) as the principal scheme. The Employees' Provident Fund Organization administers it (EPFO).

It applies to all establishments with 20 or more employees, as well as to certain organizations with less than 20 employees, subject to specified restrictions and exclusions.  Let see detail about how to Calculate PF Amount in Member Passbook.

EPF Member Passbook

The EPF passbook is a document that lists all employee and employer contributions to the EPF and EPS accounts. In the EPF passbook, all monthly contributions and accumulated interest on the beneficiary’s account are detailed. Notably, if you have numerous EPF accounts, you will have different passbooks for each account, which may be accessed after entering in with the respective member ID. To access your EPF passbook, you must register your UAN (Universal Account Number) on the official EPFO website.

Important Information on the EPF Plan and How to Calculate the PF Balance

Under the EPF programmer, an employee is required to contribute a particular amount to the scheme, and the employer is required to contribute the same amount. A lump-sum payment is made to the retiree at the time of retirement, which includes both the employee’s and the employer’s contributions, as well as interest.

If a new employee’s monthly income is more than 15,000, he or she is considered ineligible for the Employees’ Provident Fund (EPF). Enrollment in the Employees’ Provident Fund (EPF) is mandatory for employees earning less than 15,000 every pay period. With the consent of his or her company, an employee whose ‘compensation’ is higher (currently 15,000) may join the PF with permission from the Assistant Commissioner of Pensions.

Get Register To PF Account Online

Establishment Identifier and Company Name 

The passbook includes the establishment ID, which is a seven-digit number (the first two digits are typically zeroes) assigned to every company covered by the EPF system 1952. It also includes the employee’s current place of employment.

  • Member ID and name of the member (Employee)
  • The passbook also contains the employee’s name and member identification number. In order for employers to make EPF and EPS contributions on behalf of their employees, EPFO issues the Member ID.
  • Members who have multiple EPF accounts will have separate passbooks; they can be accessed by logging in with each account’s member ID

Contributions to the Trust Fund From Both Employees and Employers

  • An employee and employer contribution breakdown is included on the PF statement/passbook.
  •  The portion that contributes to EPS is also displayed separately.

According to this table, subscribers should keep in mind that although employees and employers each contribute 12%, their contributions are not identical. In part, this is because not all of the employer’s EPF contribution is placed into the account. A portion of the employer’s payment is redirected to EPS.

Interest Acquired

Employee and employer contributions earn interest once a year, which is deposited into the PF account. The interest earned is determined based on the account’s monthly balance. The PF statement includes the government-declared interest rate upon which the computations are based.

The EPFO had declared a rate of 8.5% for the 2019-2020 fiscal year. This is the lowest rate of interest in the previous seven years. In 2018-2019, the interest rate was 8.65%, compared to 8.55% in 2017-2018.

Use Vakilsearch’s pf interest calculator to find out how much money will be in your EPF account when you retire.

Contribution Made by Both the Employer and Employee

The employer contribution is equal to 12% of basic salaries + dearness allowance plus retention allowance. Similarly, the employee must likewise make a contribution. EPF regulations limit employee and employer contributions to a combined 10% for enterprises with fewer than 20 employees or that meet other criteria.

  • The majority of private sector employees are required to contribute a portion of their salary to their retirement plan. For instance, if the monthly basic income is 30,000, the employee contribution to EPF would be 3,600 (12% of basic pay) and the employer contribution would be 3,600 each month
  • However, it should be noted that not all of the employer’s contribution to the EPF fund is accounted for in the EPF
  • 8.33% of employer contributions would be allocated to the Employees’ Pension Scheme, based on 15,000
  • Therefore, for each employee with a basic wage of 15,000 or above, the monthly EPS contribution is 1,250
  • If the base wage is less than 15000, 8.33% of the entire amount would be contributed to EPS. The remaining balance will remain in the EPF plan. 
  • At retirement, the employee will receive his entire portion in addition to the Employer’s share remaining in his EPF account.

Greater Employee or VPF Contribution to the Voluntary Provident Fund

The employee may voluntarily pay a higher contribution rate than the required 12% of base pay. This is a donation to the Voluntary Provident Fund (VPF), which is separately accounted for. In addition, the interest earned by this VPF is exempt from federal income tax. However, the employer is not obligated to match these contributions.

Estimation of EPF

Employee Provident fund interest is determined based on both employee and company contributions. 12% of basic pay plus depreciation allowance is the employee’s contribution (DA). The employee contribution is 12% of Basic Pay plus Dearness Allowance, while the employer contribution is 3.67% of Basic Pay plus Dearness Allowance when the Basic Pay plus Dearness Allowance is less than or equal to 15000.

Employer 12% Contribution is typically distributed as follows:

  • 3.67% into Employee Provident fund
  • 8.33% into the Employees’ pension plan
  • 0.5% to the Employees’ Deposit-Linked Insurance Scheme (EDLIS)
  • 0.01% is allocated to EDLIS Administrative Fees
  • If the employee’s annual salary is less than or equal to 15,000/- (Compulsory)
  • 15,000 for employees’ basic pay and DA
  • Employee contribution to EPF: 12% x 15000 = 1,800
  • Employer contributions of 12% will be allocated as follows: 8.33% to the Employee pension scheme and the remaining 3.67% to the Employee Provident fund
  • However, the employer’s contribution to the provident fund is 15,000 multiplied by 3.67%, or 550.5
  • The remaining 8.33% contribution to the Employee pension scheme (EPS) is 1,249.5
  • if the employee’s annual salary is greater than 15,000 (Exempted but Voluntary)

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