Monthly EPF wage means the eligible basic salary of the employee on which the PF contribution(12%) is calculated every month. EPF wages should be entered at the time of registering the employee in the EPF scheme, and it can be changed in the ECR file.
*Note: Employee gross salary is not EPF wage, only the basic salary is considered as EPF wage.
The PF contribution is deducted every month from the employee’s basic salary and credited to the employee’s EPF account by the company.
At present EPF members whose monthly basic wage + DA (Dearness allowances) is below 15,000 Rs should come under the EPF scheme. (applicable if the company has above 20 employees)
How are monthly EPF wages calculated?
There is no particular formula to calculate monthly EPF wages. The monthly EPF wage means the basic wage, which should be 40-50% of the total gross salary of the employees.
The basic wage should be equal to or above the minimum wage fixed by the state government, so before fixing the basic wage percentage employers need to check their state’s minimum wage rates every year.
According to their state’s minimum wage rates, they should adjust the basic wage percentages.
EPF Monthly Contributions (%) for Employees & Employers
| EPF Contribution | EPF Admin Charges | EPS (Pension Contribution) | EDLI Admin Charges | |
| Employee | 12% | – | – | – |
| Employer | 3.67% | 0.50% | 8.33% | 0.5% |
What are the Minimum Wages for EPF?
The minimum wage limit for EPF is 15,000 Rs. Every employee whose monthly basic wages + DA (if applicable) is below 15000 Rs can contribute to the EPF scheme.
Even though their salary is above 15,000 they can contribute to the EPF scheme with the consent of the employer otherwise they can limit their PF contribution to a 15000 Rs slab limit.
But for pension, the EPS wage should be strictly limited to 15,000 only.
Example:
If an employee’s basic wage is 20,000 Rs then his PF & Pension contributions are like this
PF contribution (12%) = 20000 * 12% = 2400 Rs (* If employer agrees for 20,000)
Otherwise, the PF contribution is 12% of 15000 (Slab limit) = 1800 Rs.
(In the above example based on the employer’s permission the employee can pay more PF contribution, and the employer will also need to pay the same amount of PF contribution each month)
For pension contribution, the EPS wage should be less than or equal to 15000 Rs.
In the above case even though the employee’s basic wage is 20,000 Rs but pension contribution is calculated at 15,000 Rs only.
So the pension contribution is 8.33% on EPS wage = 15000 * 8.33% = 1250 Rs.
EPF Wage & EPS Wage
EPF wage is the basic wage on which the PF is calculated. The actual wage limit is 15000 Rs but employers can consider more than 15000 for PF calculation if they are willing to pay more PF to their employees.
The EPS wage limit is 15000 or less, up to this amount only the EPS wage must be considered.
How to Change Monthly EPF Wages as on Joining?
Employers can update the new monthly EPF wages in the ECR text file while paying monthly EPF returns.
ECR means Electronic Challan Cum Return used to pay the monthly PF and pension contributions. It is prepared by the employer in Excel format and converted to a text format before uploading to the EPF website.
Can Employer Pay Less Than 12% EPF?
A 10% Rate is applicable in the following cases.
- If a company has less than 20 Employees.
- Establishments in the following industries 1. Jute 2. Beedi 3. Brick 4. Coir and 5.Guar gum factories.
- If a company’s accumulated financial loss in a financial year is equal to (or) exceeds its total net worth.
- Any sick industrial company declared by the Board of Industrial and Financial Reconstruction (BIFR)
FAQs
Yes, they can be different, if the employee’s basic wage is above 15000 Rs.
Yes, you can change it in the ECR file.
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