How PF Is Calculated

Step-by-step method

1. 1Determine PF wages for the month — basic wages plus dearness allowance and retaining allowance, adjusted for loss of pay days.
2. 2Apply 12% to arrive at the employee share.
3. 3Compute the employer's EPS share at 8.33% of PF wages restricted to ₹15,000.
4. 4Deduct the EPS amount from the employer's 12% to get the employer EPF share.
5. 5Add EDLI and administrative charges on the employer side.
6. 6Round each member's amounts as required and total them for the ECR.

Common calculation mistakes

• Calculating on gross salary instead of PF wages.
• Splitting salary into many allowances to suppress basic wages.
• Forgetting to restrict the pension share to the ceiling.
• Not pro-rating wages for mid-month joining, exit or loss of pay.
• Missing arrears months when a revision is paid retrospectively.

Frequently asked questions

Is PF calculated on gross salary?

No. It is calculated on PF wages — broadly basic wages plus dearness allowance — not on gross salary or CTC.

How is PF calculated for a part month?

PF wages are pro-rated for the days worked, and the same percentages are then applied.

Sources & references

• EPFO — Employees' Provident Fund Organisation