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Provident Fund (PF) Frequently Asked Questions#

How to include employee for PF Deduction?#

Please click here to know how to include a employee under PF Scheme.

Why PF is not calculating?#

Employee will be considered for PF calculation only if you have included the employee under PF Scheme. Please click here to know how to include a employee under PF Scheme.

What are the various reports associated with PF?#

PF monthly report	This is a report that needs to be generated every month and it contains the details of Employee Pf, Employer PF, VPF and PF Basic for the employee. Based the numbers appearing in this report, the company needs to make payments to the government every month.
PF - Form 5	This is a report that is generated every month. This gives a list of all employees who have joined the company in the current month. Based on an option setting, this report can also indicate all the employees whose payroll has been processed for the first time in this month.
PF - Form 10	This is a report that is generated every month. This gives a list of all employees who have left/resigned the company in the current month. Based on an option setting, this report can also indicate all the employees who have been settled in this month.
PF - Form 12A	This is a report that is generated every month. This gives a summary of the number of employees currently covered under PF, total contribution for the month and other details
PF Challans	The triplicate copy of challans in token of having remitted the Provident Fund dues in the bank- to be submitted along with form-12A every month.
PF - Form 3A	This report is gene rated once a year. This report gives a summary of all the PF deductions (employee and employer) done for the employee in a given PF Year.
PF - Form 6A	This report is generated once a year. You can think of this report as a summary of all Form 3A. This report gives the total deductions done for each employee in a given PF Year.

Provident Fund (PF) Concepts Frequently Asked Questions#

I need to learn more about PF. What are the rules and regulations?#

The best source of information on this topic is the website of Employee's Provident Fund Organization, India. It has extensive FAQs, articles and other material on it's website on all matters pertaining to PF. There is a separate section called For Employers and we recommend you go through the various links in this section.

See also: EPFO FAQs

Can you explain the various terms and concepts related to PF?#

Sure, here is a small glossary for your reference.

Provident Fund (PF)	A savings scheme mandated and administered by the Goverment of India
Employee PF, employee contribution	According to PF rules, an employee is supposed to contribute a certain percentage (12%) of his basic salary as PF. This is normally called as PF or Employee PF .
Employer PF, employer contribution	Just like an employee, the employer also makes a contribution (12%) towards PF in the employee's favour. This is called as Employer PF.
PF Number	Every employee and employer is assigned a unique identification number called the PF number. This is similar to a bank account number and required for checking the PF balance or for any other transactions.
PF Basic	This is the salary component (usually the Basic) on which the amount of PF is to be deducted. It could also be a sum of multiple salary components like (Basic + DA). In most companies, PF Basic = Basic + DA + Basic Arrears + DA Arrears. Greytip Online lets you configure the formula and select the various components that make up the PF Gross.
PF Gross	See PF Basic
PF Year	PF accounting is done from March to February of every year. This period is called as PF Year.
Voluntary PF (VPF)	An employee can decide to save a much higher amount towards PF. There is no need for a matching contribution from the employer since this is purely voluntary.
Employee Pension Scheme (EPS)	A pension scheme

Can you explain the concept behind PF?#

Provident Fund (PF) is a statutory deduction to be done by employers as per the rules made by Government of India. It is applicable to most employees but there are some exceptions.

As per the PF rules, both the employee and the employer make a contribution to the PF fund of the employee. Every month, the contributed amount gets added to the balance of the employee. The PF contributions earn a fixed interest (9% p.a.) and accumulate over the span of service of an employee. The intention is to make the employees to save for retirement, pension, etc.

In most cases, the Government (PF Board) collects this amount and keeps it in the employee's name. After an employee retires, all the contribution made by the employee along with interest is paid back to the employee. This is handled by the PF Board and the employer or company has no role to play in it.

For e.g. If my salary is Rs. 100/-, then I should contribute Rs. 12 as my PF. This will be deposited into my PF account. Along with my contribution, my employer also make a matching contribution of Rs. 12/- into my account. So, every month, my PF account increases by Rs. 24 (12-my contribution, 12-my employer's contribution) till the end of service.

Is it possible to specify the PF Basic on which the PF will get deducted?#

Certainly. You can define the PF Basic formula to include all the components that should be considered.

What is the rate of contribution / deduction for PF?#

As per the latest laws in effect, an employee needs to contribute 12% of his PF Gross as PF contribution.
The employer needs to contribute 12% of the PF Gross to the employee's account.
The rate is generally published by the government.

Is PF applicable to everyone? Does every employee contribute to PF?#

According to the PF rules, all employees who draw a PF Basic of less than 7500 must contribute to PF. This is mandatory.

For employees having PF Basic more than 7500, the deduction/contribution is voluntary. If they want, they can opt for the deduction. Else, there need not be any deduction (from both the employee and employer perspective).

But in most companies, PF is applicable to all employees. There are exceptions (people who don't contribute), but these are few.

How does Voluntary PF work? Should we offer VPF option to employees?#

An employee informs the employer that he wants to contribute to VPF and the amount to be deducted towards VPF. The deduction is configured in the application and every month this amount will be deducted from the employee's salary and transferred to the PF account. There is no impact to the employer and helps the employees in meeting their goals.

Since Greytip Online handles all the work, there is no administrative overhead / headache for the employers to not provide such a facility to employees.

What are PF Admin Charges? What is PF Admin Charges Percentage?#

Since government is managing the PF accounts of all employees, it charges an administrative fees to the employers. These are called as PF Admin charges.
PF Admin charges is generally a percentage of the total PF Basic. This is called as PF Admin percentage.

What is the link between PF and Income Tax?#

As per Indian Tax laws, any contribution done by the employee towards PF, can be considered as an investment under Chapter 6. This can help reduce the tax liability of the employee while offering a decent return on investment.

What is Employee Pension Scheme or EPS?#

The contribution made by an employer towards PF is split into contribution towards PF and the pension scheme.

Is PF compulsory to Pvt. Ltd. Company#

PF is mandatory only when

1. Total number of employees touch the figure of 20
2. All of them should have worked for 3 months continuously
3. Any one of 20 employees have a salary less than Rs 6500/- p.m
4. once registered then you are required to file returns for all time to come

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See also:#

• Information on ESI
• Information on Profession Tax
• Information on Income Tax