PF (Provident Fund) is a retirement savings scheme under the EPF Act where the employee contributes 12% of basic + DA each month and the employer contributes a matching 12%, capped at a wage ceiling of ₹15,000.

PF (Provident Fund)

PF (Provident Fund) is a retirement savings scheme under the EPF Act where the employee contributes 12% of basic + DA each month and the employer contributes a matching 12%, capped at a wage ceiling of ₹15,000.

What is PF (Provident Fund)?

Provident Fund (PF), formally called the Employees' Provident Fund (EPF), is a statutory retirement benefit run by EPFO. Both employee and employer contribute 12% of basic + DA. Out of the employer's 12%, 8.33% goes to the Employees' Pension Scheme (EPS) and 3.67% goes to EPF. PF is mandatory for any establishment with 20 or more employees.

Formula: Employee PF = 12% × (Basic + DA) Employer EPF = 3.67% × (Basic + DA) Employer EPS = 8.33% × min(Basic + DA, ₹15,000)

Example

For an employee with Basic + DA of ₹20,000: Employee PF = ₹2,400 Employer EPF = ₹734 Employer EPS = ₹1,250 (capped at ₹15,000 wage ceiling)

How PF (Provident Fund) is used

PF is deducted from the gross salary every month and reflected on the payslip. The employer files an ECR (Electronic Challan-cum-Return) on the EPFO portal each month and remits the combined contribution.

PF (Provident Fund) FAQs

Is PF mandatory for all companies?

PF is mandatory for establishments with 20 or more employees. Smaller companies can voluntarily register.

What is the PF wage ceiling?

The statutory wage ceiling is ₹15,000 per month. Above this, employer contribution to EPS is capped at 8.33% of ₹15,000 (i.e. ₹1,250).

Can an employee opt out of PF?

An employee earning more than ₹15,000 at the time of joining can opt out only if they have never been a PF member. Existing members cannot opt out.

When can PF be withdrawn?

PF can be partially withdrawn for specific reasons (housing, medical, marriage). Full withdrawal is allowed after 2 months of unemployment or at retirement.