Manage Provident Fund
Set up and process provident fund calculations in RazorpayX Payroll.
An employer must contribute 12% towards Employee's Provident Fund (EPF) each month. It is mandatory fo all organisations to allocate for EPF as part of an employee’s CTC.
Employers and organisations qualify to contribute to EPF when any of the following conditions is true:
- The employee earns less than ₹15,000 per month.
- The employee has contributed to PF before through any past employer.
- The company has more than 20 employees.
Only organisations with less than 20 employees are not mandated to contribute to the EPF, although such an organisation can still enable it voluntarily.
EPF is a joint contribution made by both the employer and the employee. About 12% of the employee’s basic salary and dearness allowance is credited to the PF account.
Watch Out!
It is a misconception that EPF is taken only from the basic salary allocated to the employee, and that all other allowances would not be considered PF wages.
However, as of 2019, all allowances allocated to the employee, excluding House Rent Allowance (HRA), should be considered as PF wages.
This means that PF contribution must be calculated on the sum of basic salary and all other allowances, after excluding HRA.
The total 12% contribution from employer is divided into multiple categories. They include:
| Category | Percentage of contribution (%) |
|---|---|
| Employee Provident Fund | 3.67% |
| Employee Pension Scheme (EPS) | 8.33% |
| Employee’s Deposit Link Insurance Scheme (EDLIS) | 0.5% |
| EPF Admin Charges | 1.1% |
| EDLIS Admin Charges | 0.01% |
An employer contributes only about 3.67% to EPF. The rest of the contribution is added to Employee’s Pension Scheme (EPS). Provident Fund is a contribution to build a retirement corpus for employees.
In specific cases, the employer can decide to contribute only 10% to EPF, instead of 12%. This is specific to when:
- The number of employees is less than 20.
- The company incurs more losses than its net worth.
- The company is involved in beedi, jute, brick, guar gum or coir industry.
To bridge gender gap, some companies also contribute only 8% as a part of new women employees' contribution towards EPF, while maintaining 12% of the employer's contribution.
Before using XPayroll to process PF contributions, configure XPayroll to handle your PF payments. Update your PF settings and calculations, set up a PF limit, and more by navigating to Settings > Payments & Compliance Setup.
Watch Out!
By default, XPayroll will calculate PF on all wages (except HRA). You can change the configuration in such a way that PF is calculated on basic salary only, but XPayroll will not be responsible for any compliance issues if you do this.
To register your employees for PF, you must:
- Log into your
- Navigate to People from the left menu.
- Add the employees to XPayroll.
- Select the employee's profile, and navigate to Provident Fund, Professional Tax & ESI.
- In PF Status, select Opt In. Here, enter the UAN number of the employee if the employee has one.
After receiving your PF registration request, the PF status of the employee will change to registration pending. Once we have registered the employee, the status will change to enabled.
PF contributions on XPayroll are calculated as 12% of all fixed wages (except HRA). You can set a PF capping to see how the 12% calculation reflects as part of the basic salary.
When enabled, XPayroll will cap the fixed wages at ₹15,000. The maximum contribution calculated by XPayroll will be 12% of ₹15,000, which is ₹1,800. This ₹1800 will be credited.
If you have not set a cap, the XPayroll will calculate PF at 12% of basic salary, assuming it is above ₹15,000.
Employers’ contribution towards PF can be greater than 1%, depending on whether you choose to include and allocate EDLI and admin charges in the employee’s CTC.
The EPFO imposes a minimum ₹500 as administration charges. If you have fewer than 7 employees, then XPayroll will charge you this amount separately.
Your organisation must make Provident Fund contribution payments on or before the 15th of the following month. For example, your January contribution to EPF must happen before February 15.
If the PF payment is pending, EPFO sends notices with delayed amount payable under Damages (Section 14B) and Interest (Section 7Q). These delays occur due to the following reasons:
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Non-registration/Delayed registration of employees: In some cases, new/existing employees' PF registration may be pending. Even though the salary is processed, the PF payment remains on hold due to incomplete PF/UAN information. Know more about
.To resolve this:
- Log in to the .
- Go to People from the left menu → employee/s profiles → Provident Fund, Professional Tax, ESI & LWF.
Check the status of your employee/s PF registration and ensure you complete it before the payroll execution date of the respective month.
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Delayed Salary Execution: Delayed salary processing can create delayed PF payments as the PF payment is made after the PF contribution due date (15th of the following month). For example, PF payment due for January 15 and is paid on January 20 creates delays in the PF payments.
To resolve this:
- Log in to the .
- Navigate to to the PAYMENTS page from the drop-down menu on the portal.
- Click Prepare 7Q-14B Challan against Damages and Interest in the ECR Qucik Links table and pay the delayed PF payments amount.
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