Provident Fund - Types of PF & Contribution Rates | Indiafilings

Provident Fund (PF)

Provident fund is a welfare scheme for the benefit of the employees. Under this scheme, a certain sum is detected by the employer from the employee's salary as his contribution to the Provident Fund every month. The employer also contributes a certain percentage of the salary of the employee to the provident fund. The interest earned on these investments is also credited to the provident fund account of the employees. At the time of retirement, the accumulated amount is given to the employee, if certain conditions are satisfied.

Types of Provident Funds

  • Statutory Provident Fund (SPF)
  • Public Provident Fund (PPF)
  • Recognised Provident Fund (RPF)
  • Unrecognised Provident Fund (URPF)

Statutory Provident Fund (SPF)

Statutory Provident Fund is set up under the Provident Fund Act, 1925. They are also known as Government Provident Funds. So employees who work for these institutions would be qualified to give to them.

Public Provident Fund (PPF)

Public Provident Fund is a scheme, which is covered under Public Provident Fund Act, 1968. Any member of the public, whether in employment or not, may contribute to this fund. Therefore, even self-employed persons may contribute to this fund. The minimum contribution to this Fund is Rs.500 and maximum Rs.1,50,000 per year. The contributions made to the scheme along with the interests are repayable after 15 years unless extended. The rate of interest, at present, under the scheme is 8% per annum.

Recognised Provident Fund (RPF)

Recognised Provident Fund scheme is a scheme to which the Employee's Provident Funds and Miscellaneous Provisions Act, 1952 applies. According to this Act, any person who employs 20 or more employees, is under an obligation to register himself under the PF Act, 1952 and start a provident fund scheme for the employees in his organization. However, there is no restriction if the employer and the employees of such establishment wish to start a scheme even if the number of employees is less than 20. The establishment has a choice between the following two alternatives,
  • They may join the government scheme set up by the Provident Fund Commissioner under the Provident Fund Act, 1952.
  • They may start a PF scheme in their own organization and get the approval of the Provident Fund Commissioner.
The Government scheme is already recognized by the Commissioner of Income Tax but for the second scheme started by the employer and the employees themselves, they have to create a trust for running such scheme and besides taking the approval from the Commissioner of Income-Tax. In these case, the funds of the trust and required to be invested in a particular manner and the income of the Trust is to be claimed as exempt from income-tax. If the CIT grants the approval, it is called a recognized provident fund scheme.

Unrecognised Provident Fund (URPF)

A scheme started by the employer and the employees in an establishment, whether approved by the commissioner of Income Tax is called an unrecognized provident fund. Know more about Types of Provident Fund.

Who should register for Provident Fund?

An establishment should register for Provident Fund (PF) with the Employees' Provident Fund Organization (EPFO) if it has 20 or more employees, particularly if it falls under specified establishment types as per the regulations. Once an establishment crosses this eligibility threshold, it is legally required to register for PF. However, establishments that do not meet this threshold are not statutorily mandated to register but can choose to do so voluntarily. Registering for PF helps provide social security benefits to employees, ensuring a secure retirement fund.

PF Contribution Rate

PF contribution paid by the employer and employee is 12% of (basic salary + dearness allowance + retaining allowance). Equal contribution is payable by the employee and employer. In case of establishments which employs less than 20 employees or meet certain other conditions, as per the EPFO rules, the contribution rate for both employee and the employer is restricted to 10%. For most employees working in the private sector, it’s the basic salary on which the contribution is calculated. It is necessary that employees’ drawing less than Rs 15,000 per month, to become members of the EPF. As per the guidelines in EPF, employee, whose ‘basic pay’ is more than Rs. 15,000 per month, at the time of joining, is not required to make PF contributions. However, an employee who is drawing a pay of more than Rs 15,000 can still become a member and make PF contributions, with the consent of the Employer and Assistant PF Commissioner. Get expert help from IndiaFilings for a seamless PF registration - quick & reliable!! Register Now!
RASIKA. S
Updated on: January 8th, 2025

Popular Post

Download ePAN Card – Get ePan from NSDL & UTIITSL
80 Small Business Ideas

Starting a small business can be a transformative venture, offering the exciting opportunity...

Nadakacheri – Income Caste Certificate Download Online in Karnataka
TDS Rate Chart for Financial Year 2025-2026 (Assessment Year 2026-2027)

Tax deduction at source, shortly and popularly known as TDS, was introduced by the Income Tax...

Divorce Rules in India: Everything You Need to Know
How To Download GST Registration Certificate Online?

Goods & Services Tax Certificate is issued to people who are registered under GST...

PAN Card Cancellation Online
Find Complete Details of GST Registration Procedure

GST registration applies to all individuals and entities supplying goods or services in India. GST...

Check Your PF Claim Status Online Using PF Tracking ID
Gift Tax in India: Applicability, Exemptions and Rules

Gift tax in India is applied when the value of the received gift exceeds ₹50,000 in the...

Check Your PF Claim Status Online Using PF Tracking ID
Old Regime vs New Regime 2025: Which Tax Regime is Better for You?

The Union Budget 2025 has brought significant changes to India’s personal income tax structure, raising the...

Check Your PF Claim Status Online Using PF Tracking ID
What is the minimum turnover for GST?

The Goods and Services Tax (GST) is an indirect tax system introduced in India in 2017. It functions...

Check Your PF Claim Status Online Using PF Tracking ID
How can I check if a trademark is registered?

A trademark search is simply checking if another person or organization does not already own the...

Check Your PF Claim Status Online Using PF Tracking ID
Section 194H of the Income Tax Act: TDS on Commission & Brokerage

Section 194H of the Income Tax Act in India mandates the deduction of Tax at Source (TDS) on commission or brokerage...

Check Your PF Claim Status Online Using PF Tracking ID
Section 80G Deduction - Income Tax Act

Section 80G Deduction is a facility available in the Income Tax Act which allows taxpayers to...

Check Your PF Claim Status Online Using PF Tracking ID
Crypto Tax in India: Taxation On Cryptocurrency

The Income Tax Department (ITD) has not provided specific guidance on crypto taxes for Indian investors. However...

Check Your PF Claim Status Online Using PF Tracking ID
Internal Audit Applicability Under Companies Act, 2013

Internal audit applicability is a critical concept for companies in India, impacting various...

Check Your PF Claim Status Online Using PF Tracking ID
Difference between Private and Public Company

In the business world, two main types of companies exist: private company and public company...

Check Your PF Claim Status Online Using PF Tracking ID
New GST Rules for Rent

Ministry of Finance vide a Notification No 05/2022- Central Tax (Rate) dated 13.7.2022 has issued...

Check Your PF Claim Status Online Using PF Tracking ID
GSTR-1 and GSTR-3B Due Date Extension - New Due Dates For January 2025

The Central Board of Indirect Taxes and Customs (CBIC) has recently announced an extension...

Check Your PF Claim Status Online Using PF Tracking ID
Different Depreciation Rates under Companies & Income Tax Act

Depreciation is a key concept in finance and accounting. It helps us manage how the value of...

Check Your PF Claim Status Online Using PF Tracking ID
Form 10IA - Section 80DD Deduction

Form 10IA of the Income Tax Department must be filed by taxpayers claiming income tax deduction...

Check Your PF Claim Status Online Using PF Tracking ID
GST on Used Cars: New 18% Tax Rate Explained

The Goods and Services Tax (GST) system in India has been a significant reform in the country's...

Check Your PF Claim Status Online Using PF Tracking ID
MSME Registration - Udyam Registration

India's Gross Domestic Product (GDP) benefits significantly from the substantial...

Check Your PF Claim Status Online Using PF Tracking ID
Section 43B(h) - New MSME 45 Days Payment Rule

The Finance Act, 2023 introduced the MSME 45-day payment rule under Section 43B(h) of the Income Tax Act...

Check Your PF Claim Status Online Using PF Tracking ID
Direct Tax Vivad Se Vishwas (DTVSV) Scheme, 2024

The Direct Tax Vivad Se Vishwas (DTVSV) Scheme, 2024, was announced by Union Finance Minister...