Break-up of EPF Contribution

• Team Antworks

• 12% of the employee’s salary goes towards the EPF.
• Whereas the employer’s contribution is divided as below:
  1. 3.67% goes towards contribution for EPF
  2. 8.33% goes towards contribution for EPS
  3. 0.5% goes towards contribution for EDLI
  4. 1.1% goes towards contribution for EPF administration charges
  5. 0.01% goes towards contribution for EDLI administration charges

Therefore, the employer contribution is 13.61%. The premium and management charges are borne by the employer and the maximum limit is set at 0.5% of Rs.15,000.

The EPF contribution can be offered at 10% rate, if:

• Any establishment that has less than 20 employees.
• Any sick unit that has been declared as sick by the Board for Industrial and Financial Reconstruction.
• Any establishment that has accumulated losses equal to or exceeding its net worth.
• Establishments in jute industry, beedi industry, coir industry and Guar gum factory.

For EPF:

• The contributions are payable on a maximum wage ceiling of Rs.6,500 by both employee and employer.
• An employee can pay a higher rate but the employer is not under any obligation to pay much higher rates.
• In order to pay contribution on higher wages, you are required to submit a joint request from employer and employee. The employer will have to pay administrative charges in higher wages.
• If the employee is an international worker, wage ceiling of Rs.6,500 is not applicable.

For EPS:

• Here the contribution is made out of the employer’s share of PF. The employee has to make no contributions.
• The pension contribution is not to be paid if the employee crosses 58 years of age and is in service. If the EPS pensioner is drawing the reduced pension and re-joins as an employee, the pension contribution is at 8.33% that is to be added to the employer share of PF.
• In other cases, pension contribution is payable. If a member joins after the age of 50 years, and he or she does not have a choice of not getting the pension contribution as they may not complete 10 years of eligible service. The social security cover is applicable till he or she is a member.
• If the employee is an international worker, wage ceiling of Rs.6,500 is not applicable.

For EDLI:

• The contribution is to be paid on up to the maximum wage ceiling of Rs.6,500.
• EDLI contribution is not payable if the employee crosses 58 years of age. The contribution is paid as long as the member is in service and as long as the PF is being paid.

 

 

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