The Employee’s provident fund and miscellaneous provisions act, 1952 is enacted to provide a kind of social security to the industrial workers. The Act mainly provides retirement or old age benefits, such as Provident Fund, Superannuation Pension, Invalidation Pension, Family Pension and Deposit Linked Insurance.
Applicability of the Provident Fund Act 1952
To every factory employing 20 or more persons.
An employee whose pay at the time he is otherwise entitled to become a member of the fund exceeds Rs.15000/- per month
An Employee who having been a member of the fund, has withdrawn the full amount of his contribution in the fund
(a) on retirement from service after attaining the age of 55 years or
(b) before migration from India for permanent settlement abroad; or for taking employment abroad.
Rates of Contribution
(Provident Fund Act 1952 is Calculated from Basic Salary + DA)
| Scheme | Employee’s Contribution | Employer’s Contribution |
| Employee Provident Fund (EPF) A/C No.1 | 12% / 10% # | 3.67% |
| Employee Pension Scheme (EPS) A/C No. 10 | 8.33% or Rs.1250/- | |
| Administration Charges A/C No.2 | 0.50% | |
| Employee Deposit-Linked Insurance Scheme (EDLI) A/C No. 21 | 0.50% | |
| EDLI Administrative Charges A/c No.22 | 0.00% | |
| Total | 12% | 13.00% |
Here is an example of how EPF calculation and rates work:
- Employee’s basic salary: Rs. 15,000
- Dearness allowance: Rs. 2,000
- Total salary: Rs. 17,000
- Employee’s contribution: 12% of Rs. 17,000 = Rs. 2,040
- Employer’s contribution: 12% of Rs. 17,000 = Rs. 2,040
- EPF balance after one month: Rs. 4,080
- Interest earned after one month: 8.15% of Rs. 4,080 = Rs. 33.12
- EPF balance after two months: Rs. 4,113.12
10% PF Rates applicable for which industry?
The 10% PF rate is applicable to the following:
- Establishments employing less than 20 employees
- Any Sick industries declared by the BIFR
- Loss-making establishments accumulated losses equal to or exceeding its entire net worth
- Jute, Beedi, Coir, Brick, Guar Gum industries
- Establishments operating under the wage limit of Rs. 6,500
The 10% PF rate is applicable for both the employee and the employer. This means that the employee’s contribution will be 10% of his/her basic salary and dearness allowance, and the employer’s contribution will also be 10% of the employee’s basic salary and dearness allowance.