Provident fund is a fund which is composed of contributions made by the employee during the time he/she worked along with an equal contribution by his employer

RATE : Provident fund is calculated as 12% of his/her basic salary & the same amount is contributed by the employer.however employee have a option to contribution more than 12%


Employers contribution of 12% of basic salary is totally deposited in provident fund account whereas out of employees contribution of 12% , 3.67% is contributed to provident fund & 8.33% is deposited in Pension scheme.


employees drawing basic salary upto Rs. 1,5000/- have to compulsory contribute to the provident fund . however , employees drawing above Rs. 15,000/- say Rs. 15,001 have an option to become member of the provident fund.


1. Tax benefit u/s 80C
2. retirement benefit
3. withdrawal benefit

1.However if a person withdraw the amount of provident fund before the end of 5 years all the benefits he got u/s 80C against Provident fund will get reversed & added with the income in which withdrawal has been made & fully taxable . So be careful about the timing of withdrawal.
2.Benefits under the pension fund is available only after the continuous service of 9.6 years & after completing the age of 58 years . continuous service of ten year does not means to work with the same company but every time when a person change job ,the PF account must be transferred & continuous for ten years.


1.Form NO. 2 is required to be filled to become the member of the provident fund.it is called a Nomination Form .
2.Form no. 13 is required for transfer of Provident fund.
3.Form no. 19 is required for withdrawal of provident fund
4. Form no. 10C is required for withdrawal of pension fund.

All the forms are available with the HR department of the company .

provident fund plays a very important role because at the time of retirement a person get a healthy sum & pension amount subject to the conditions fulfilled as per provident fund Act.

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65 Comments on PROVIDENT FUND

  1. preyrna says:

    How much tax benefit will the employer be getting in case of going for provident fund.

    • Ranjeet Gill says:

      Employers contribution to PF is available as expenses to the employers hence the employer will get the deduction for the amount actually paid.

  2. PRASANTH says:

    what is the role of provident fund in income tax ?

    • Ranjeet Gill says:


      Provident fund is covered U/S 80C of the income tax Act,1961.
      hence deduction is available from the total income for the total amount of PF deducted in the particular financial year .


      Ranjeet gill

    • Ranjeet Gill says:

      Provident fund is covered u/s 80 C ,therefore deduction from gross income is available for the amount of provident fund which is deducted from salary for the particular year.


  3. Darshan says:

    My company had mentioned in my offer letter as (Company Contribution to E.P.F) component i.e. 12% of Basic. I have also opted for PF Scheme. So in every month’s pay slip, 12% of basic is only deducted from my salary but the component which was added by company in my offer letter is never shown in my salary slip. Even when I checked my EPF Balance online, it shows only the amount deducted from my salary slip. So I still didn’t get it, where is that 12% of basic which was agreed by company to pay in my offer letter, gone?

    • ranjeet says:

      Hi Darshan ,

      Company contribution to PPF mentioned in offer letter for CTC purpose . that means what company is offered to you includes their contribution to PPF also .
      Company’s contribution to PPF will never show in your payslip becayuse that is part of CTC only. In payslip only part of PF belongs to employee part will show .
      Secondly PF contribution by company will be devided in two parts :

      1.8.33% for pension fund
      2.3.67% for Providend fund.
      because of that when you are checking EPF balance online only yours part & 3.67% part of employers contribution will show.

      further when you withdraw PF you will get two different amounts one for PF & other for Pension fund later on .

      So no need to worry . company is bound to pay 12% in PF account of yours .

      Ranjeet gill

  4. venu says:

    Dear Sir,I got a Job offer in a company, when I see the salary break up the ctc is 2.34 pa,In CTC when they add employer’s contribution towards pf and Insurance my total CTC comes to 19500 per moth,In deductions they are deducting employee contribution and employer’s contribution towards PF ,780,780 respectively, after all variables I am getting 17610 as take home and the deductions per month are Rs.1890/-, so I didn’t get where company contributing PF to me Please give suggestion

  5. Muthazhgan A says:

    if i wish to contribute more in my salary as “pf”. can i able to do it?is it fixed?if i do it more than the prescribed percentage,is it under tax exemption?what s the timing interval of employee to get their pf?

  6. ashish garg says:

    Total amount of pf is allowed or not u/s 80c.
    total amount means
    1.employers contribution’s
    2.employee contribution;s

  7. nayanjeet says:

    why pf contribution is 15% of basic not more and not less ?

  8. Sudarshan says:

    My employer deducts 24% (12% EMPLOYER AND 12% EMPLOYEE CONTRIBUTIONS, BOTH) from my salary itself. Is it correct??

    • ranjeet says:

      Dear sudarshan,

      AS per CTC concept companies include both deductions (PF) in CTC. So while paying salary they deduct both amount 12% + 12% from employees salary .So the company is not doing anything wrong.


      Ranjeet gill

  9. Prateek Agarwal says:

    Dear Sir,

    If Emoloyer contribution is part of ctc than it will allow in 80c of incometax act or not Please explain

    • ranjeet says:


      Employers contribution is part of CTC but not part of salary you actually get it from .
      Employers contribution is not allowed as deduction u/s 80C.


      Ranjeet gill

  10. Chinna says:


    I am currently in a 12% on basic PF option.
    Is there a way i could change to the 12% on 6500 option (Rs. 780pm)?

    Can you please let me know about this issue.


    • ranjeet says:

      HI ,

      You can but it depends on your employer . generally employer keeps a single system for deduction of PF .
      I don’t think so that they will agree to deduct on Rs 6500 (Rs 780) .

      Ranjeet gill

  11. Prashant Chauhan says:

    Dear Sir,
    I have withdrawn my PF money from my employer after 6.8 years of continuous service as I have got a job abroad. Do i have to pay tax on the PF or the interest earned on it. Both employee and employer PF deductions were part of my CTC.

    • ranjeet says:

      HI ,

      You have withdrawn PF after 5 years . There is no need to pay tax on amount received from PF authority . PF amount is taxable only if withdrawn before 5 years .


      Ranjeet gill

  12. Ritesh says:

    Dear Sir,

    My monthly gross salary is Rs. 34220(CTC is 35000) and basic salary is 15399. PF deducted is 780 from my side and 780 is employer side(35000-780). As per PF act 12% of basic is for PF can you please clarify it how Rs 780 is employee and 780 from employer contribution.

    Please Reply.


    • ranjeet says:


      Your employer is deduction 12% of Rs. 6500 which comes to Rs.780.
      To avoid higher payment in PF account . they are deducting 12% on lower side which is as per act Rs 6500.


      Ranjeet Gill

  13. Ashima Sahni says:

    Hey! I have resigned from my last organisation. The gross amount of my PPF is 18k. If i withdraw it before 5 years, will some amount get deducted? If yes then how much? And how can I evade deduction?

    • ranjeet says:


      You can withdraw it any time after your resignation. Only difference is if you withdraw Pf before end of 5 years it becomes taxable and you will get money after deduction of TDS.


  14. Nowsheen says:

    Mr. Ranjeet,

    I have gone through all your answers, thank you very much. Can you kindly give me your e-mail.I.D so that i can discuss with you related my HR issues further.

  15. Nowsheen says:

    Thank you Ranjeet. All your answers helped me to clear all my doubts. Can you please give me your e-mail I.D.

  16. srikanth says:

    Thanks a lot boss,it was very useful for my interview and i really want to appreciate from my heart.

  17. Joe Jacob says:

    Hi All,

    I wanted to withdraw my PF before 5 yrs, do you know what is the percentage of TAX charged on this amount.

    With Regards,
    Joe Jacob

  18. Ramya says:

    My company deduct 3600 ppf from salary due to new rule.
    In salary slip they have added there contribution as well. as 1800 and in deduction 1800 from our side. Is it feasable. Is total amount shoud be in 80c

    • ranjeet says:

      HI Ramya,

      As per new rule minimum wage limit increased to Rs 15000 from RS 6500.
      Company has deducted Rs 1800 from your salary plus employer share aslo. You will get deduction U/S 80C for your share only i.e. Rs 1800 p.m. now onwards.
      this is ok from the company side.

      One thing i just wanted to tell you that this rule become applicable from Sep-14.

      Ranjeet gill

  19. amarraj says:

    why r the pf rate is 12%

  20. Mahesh says:

    Hi Ranjeet,

    CTC in included with mployer contribution to PF. just want to know whether only employer contribution to PF is non taxable under 80c or both employee & employer contribution


  21. prabhakar says:

    PF withdrawal is taxable after 5years of continuous service, please replay on mail id.

  22. SD says:

    Hi Ranjeet,
    1)I have not opted for EPF in my company. Does that mean I will get the in hand salary which will include both employee and employer contribution to EPF since its a part of my CTC or I will loose out on the employer contribution since I have not opted for it?
    2) The interest on employee and employer contribution is taxable at maturity?

    • Ranjeet says:

      Hi Shweta,

      If you have not opted for PF you will not get employers portion with your salary.
      Also PF including interest is taxable only when if you quit job before continous service of 5 years.

      Ranjeet gill

  23. Vinod Kumar 09754944903 says:

    Hello Mr. RANJEET,

    I have gone thru the discussion above and I shall thank you a lot coz almost all of my doubts are cleared except one.

    Is it compulsory for the EMPLOYER to contribute in EPF irrespective of the salary of the employees?

    Actually, I m getting more than 15k per month and my employer says that as my salary is more than 15,000 so EMPLOYER is NOT liable to make the epf contri.
    According to my employer, I have 2 choices…

    1. Neither Employees (with salary > 15000) nor the the employer make epf contri.
    2. The Employees only make both the contri I.e. (1800+1800).

    Is that ok or my employer is just misguiding and hence cheating on me?

    I shall be highly thankful to you for this.

    • Ranjeet says:

      Hi Vinod,

      Generally as per CTC concept companies include employers portion of EPF contribution to employers salary & both employee & employers part is being decucted from employees salary .

      If a employee is getting more than 15000 salary , it is not mandatory to deduct PF from his salary , but its up to companies policy they compulsory deducting PF or not

      Also once PF deduction started it can not be stoped until a employee quit the job.


      Ranjeet gill

  24. Neha says:

    Dear Ranjeet,

    Don’t you think its unfair, suppose if employee is getting 8,000 per month & PF deduction from his/her salary is both ways “employee & employer” according to CTC then think about his/her take away home.


    • Ranjeet says:


      Well it is unfair but under CTC concept employers add their part of PF while offering salary .
      So always discuss your salary on take home or In hand basis.


      Ranjeet gill

  25. Dharmendra kumar dubey says:

    My salary is rs 5000. In this amount it is essential that pf will be deduct ? If deducted explain me the calculation?

    • Ranjeet says:


      PF is must if basic salary is equal ro Rs 15000 of less.
      In your case your salary is less than that limit, hence PF deduction is must on basic salary.


      Ranjeet gill

  26. zubair ahmed says:

    respected sir / mam
    my question is whats is the benefit for employer in submitting 12% of amount behalf of employees? is epf can helping saving taxes for employers……..

    • Ranjeet says:

      Hi ,

      Employers get deduction as expenses for employers contribution to PF . It is more beneficial for the employee if employer is contribution their part of PF from
      company .


      Ranjeet gill

  27. Raja says:

    if i withdraw Pf before end of 5 years it becomes taxable and i will get money after deduction of TDS. so, please explain how can i claim that TDS amount. will i get any TDS certificate?

  28. Tanaya Ramyani says:

    Hi, I am planning to apply for a company. And that company says that they do not have PF deductions? Is that alright?

    • Ranjeet says:

      Hi tanaya,

      That can be possible if company is not registered for PF only .If the strength of the company is less than 20 people , it is not mandatory for the company to go for PF registration .
      other case may be if all people are getting higher salaries like if basis salary is more than Rs 15000 for all employees it can be possible .

      there is no problem with that , you can join the company whenever it will become applicable , PF deduction will also start .

      ranjeet gill

  29. javeed says:

    I have resigned from my position, I have submitted my documents for PF settlement. But my shock, my ex employer says 10% deduction on my PF savings.

    Can I know is it true.

    • Ranjeet says:


      This is fine my dear , once you have withdrawn PF before continous service of 5 year , 10% will be deducted as TDS . If you think you are not coming tax ambit, you can claim the same by filing ITR.

      Ranjeet gill

    • Ranjeet says:


      This is fine my dear , once you have withdrawn PF before continous service of 5 year , 10% will be deducted as TDS . If you think you are not coming tax ambit, you can claim the same by filing Income tax return.

      Ranjeet gill

  30. Sumit Adhav says:

    How much is deducted from pf if we withdraw the pf account?

    • Ranjeet says:


      If you worked with a company continously for 5 years & withdrawn amount after that , there will not be any deduction from PF amount .

      In any other case 10% will be deducted .

      Ranjeet gill

  31. HArdik says:

    Dear Sir,
    We are Dyeing nd Printing Industry in Gujarat. we Have approx 225 employees working in factory. Now, we have plans to cover all staff under PF/ESI scheme. My few queries are as below:
    1) PF/ESI employer contribution is calculated on Total Salary or Basic Salary..? (for employees drawing below 15k salary)
    2)is it possible if basic salary is below the Minimum Wages per month (26 days) i.e Rs.7800/- . For Example: If an employee draws Rs.10,000/- Pm and his Basic is Rs.4000/- (40% of gross). On what amount will the PF be calculated for employer’s contribution. ?

    • Ranjeet says:

      Hello Hardik,

      1. PF / ESI both are deducted on Basic salary . In both the case if employee in drawing below Rs 15000 PF and ESI will become applicable .
      2. Yes it can be. Minimum wage per month is total wages . Basis salary could be lower and generally it is kept low because basic salary is fully taxable & both PF and Deduction are made on basic portion . Employers contribution of PF is fixed on basic salary @12 % , employee shall have option to opt for higher deduction from their salary.

      Hope this will help


      Ranjeet gill

  32. Ravi says:

    I was working for a company from 10th April 2012 to 31st March 2015. I resigned and joined a smaller company with employee strength 17 only and hence no PF account. I withdrew my PF and recieved the amount with tax as I submitted 15G.

    The PF amount was 3,00,000 INR. Is there a clause of tax exemption as my present company does not have PF account or I have to pay the tax in this financial year?

    • Ranjeet says:

      Hi ,

      Tax on PF withdrawl is exempt only when you worked in a company for 5 years , in your case you left the ogranisation within 3 years. So minimum deduction of tax will be 10% .
      Secondly 15G is submitted for declaration that you don’t have any other income & you are coming under tax ambit.

      but like you said you had joined another organisation , you are earning .

      Ranjeet gill

  33. Prabeer Saha says:


    My monthly contribution to PF (12% of salary) is 5100, hence company is paying 5100 too (EPF+EPS). Company’s contribution is not showing in my payslip which is expected.

    My Questions are:

    1) If I opt for a fixed PF of 780 pm (instead of 5100), I will get that amount in my Payslip. Will it become taxable taxable?

    2) Now that I cannot see employer contribution of 5100, does it means that I am not paying tax for it to? This effectively means I am getting tax benefit of 1.5lpa + 5100×12 = 2,11,200? Is it correct?

    Dos all these means if I opt to choose for lower PF amount I will end up paying much more tax?

    I have invested in tax savings scheme for another 90K to get 5100*12 + 90000=1.5lpa full benefit. But It I reduce my PF to 780 pm and invest rest of 1,50,000 – 780*12=1,49,000 I still see that I will be end up paying extra tax due to employer contribution – 5100-780=4320*12=51,840 which will be in my payslips.

    Please clarify if I am missing any key point. I would like to take a decision where I can save maximum tax.

    Thanks in advance

    • Ranjeet says:

      Hi Prabeer,

      Hope you are doing well . I had seen your query, About PF some points should always be very clear .

      1.Employee portion of PF amount is a non taxable amount & deduction u/s 80C is available within the limit of 150 LPA.
      2.Employer contribution is always taxable for the employee because employer is getting deduction for the same as expense like salary and debited to profit and loss account .
      hence double deduction will not be available to both employee & employer.

      Now i come to your points

      1.if you opt for Rs 780 pm , your portion of amount will be exempt & employer portion of Rs 780 will be taxable . see if you opt for 780 pm , employer will also start Rs. 780 for their portion , hence this is a loss making decision for you . my advise to keep going with Rs 5100 pm
      2.Generally employers portion is included in CTC part , only your portion of PF of Rs 5100*12 Rs 61200 is exempted from tax , employer portion of the same amount will be taxable because employer is getting benefit of that amount as expense to the company . Golden rule applies , for one expense two person cannot take benefit of same kind. it is expense for one & income for other .
      further you will get maximum deduction of 1.5lpa . your calculation of Rs 211200 is not correct .

      PF is some kind of investment which is tax free when you withdraw the amount subject to some conditions.

      As i narrated above you will get benefit only for your portion of PF under 80C . hence forget employers portion while planning for limit of 1.5lpa.

      Hope this will clarify all your queries.

      if any doubt , you can write to me


      Ranjeet gill

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