What is EPF contribution? Simply said, it is the amount that you, as an employee, contribute towards your EPF account PLUS the amount your employer contributes towards your EPF account. EPF employer contribution is equal to the EPF employee contribution (10% or 12%).
Let’s learn all about EPF contribution, how much an employer pays towards EPF, what is an employee EPF contribution and the rate at which this amount is contributed, i.e. EPF contribution rate.
EPF Contribution Rate
EPF contribution rate is the proportion at which the employer and employee contributes towards EPF. This is either 12% or 10% of the basic salary of the employee plus the Dearness Allowance. If the employee is paying 10%, then employer will also pay 10% towards EPF and likewise with 12% rate of EPF contribution. Basically, employer has to match the employee’s share.
|Contribution by||Monthly Contribution|
|Employee||10% or 12%|
|Employer||Same as employee’s share|
|Total EPF Contribution||20% or 24%|
What is Employee’s EPF Contribution?
The employee’s contribution goes directly to the EPF account. It is equivalent to 12% of the basic pay plus dearness allowance plus retaining allowance. If there are less than 10 employees in the organisation and the employer EPF contribution rate by 10%, even the employee will contribute 10%.
EPF Contribution: Important Points
- The above-mentioned EPF contribution is calculated on maximum wage ceiling of Rs. 15,000
- Wage ceiling of Rs. 15,000 not applicable for international workers
- Employee’s total share goes to EPF account
- Employer’s 8.33% share goes to EPS and the remaining goes to EPF
- Employer also pays 0.5% towards EDLI – Employee insurance scheme under EPF only
- 0.5% administrative charges are to be paid by employer
- Employer can choose to pay towards EPF at a higher rate – employee does not have to match this percentage
- 10% rate for employee’s contribution is applicable to:
- An establishment with less than 20 employees
- Any loss-making company (accumulated losses equal to or above company’s entire net worth)
- An establishment in 1) Jute, 2) Brick, 3) Beedi, 4) Coir or Guar gum industry
- If employee crosses 58 years of age and is still in service, employer’s share no longer goes to EPS; all amount goes to EPF only
- EDLI contribution from employer’s share is to be paid till the employee is in service, irrespective of their age
EPF Employer Contribution
As per the EPF rules, employer has to match their employee’s contribution towards EPF. This means that if the employee contributes 10%, the employer will also pay 10% and if the employee EPF contribution is 12%, employer EPF contribution shall be the same.
Also, 8.33% of the employer EPF contribution goes towards EPS and the remaining towards EPF account. Thus, the employee’s pension is funded by their employer.
EPF Employee Contribution
Employees can contribute 10% or 12% of their basic salary plus DA towards their Employee’s Provident Fund or EPF. This rate of employee EPF contribution depends on the establishment’s size (employee count), profit/loss statement and the type of industry.
Pension Contribution in EPF
Some of the important points regarding the Pension contribution in EPF:
- EPS or the Employee Pension Scheme is a sub-scheme of the Employee’s Provident Fund or EPF scheme.
- 8.33% of the employer’s share goes towards the Pension Fund of the employee.
- Employee’s contribution is not diverted to the EPF Pension Fund or EPS.
- Employee gets a monthly pension (max. Rs. 1,000) from this pension fund after they attain 58 years of age.
- Premature withdrawal from EPF pension fund can also be done under certain case.
|Read more about EPF:|
|EPF Balance Check||EPF Correction Form||EPF Passbook|
|EPF Calculator||EPF Interest Rate||EPF Pension|
|EPF Wages||EPF Online Claim||EPF Rules for Employers|
|Read more about UAN:|
|Read more about EPFO:|
|EPFO E-Sewa||EPFO Online Payment||EPFO KYC Online Update|
|EPFO Establishment||EPFO Member Portal||EPFO Registration Process|
|Read more about EPF Forms:|
|EPF Form 10C||EPF Form 19||EPF Withdrawal Form 31|
EPF Contribution: FAQs
No. EPF contribution rate is the rate at which employer and employee pays towards the EPF. EPF interest rate is the rate at which interest is credited to the EPF account of the employee.
Employee contributes either 10% or 12% of their basic salary + DA (Dearness Allowance) towards their EPF account led to make EPF Scheme.
The amount paid by the employer towards their employee’s EPF account is called as EPF employer contribution. Employer’s contribution towards EPF is the same as that of employee’s EPF contribution.
10% or 12% is the rate of EPF contribution.
If the establishment has less than 20 employees, EPF contribution can be 10%, for employee and employer both.
EPF contribution of 10% or 12% is calculated on basic salary + DA of the employee. This is capped at Rs. 15,000.
There is a wage ceiling of Rs. 15,000 set by the EPFO. This means that even if the employee’s basic salary + DA is more than Rs. 15000, EPF contribution will be paid on Rs. 15,000 only.
As an employee, you can check the EPF contribution made to your EPF account, in your EPF Passbook. This passbook can be viewed and downloaded either from the EPFO Member Passbook Portal or UMANG mobile app.