What is Provident fund (PF)?
Short answer
Provident fund is a retirement savings scheme run by the EPFO. The employee pays 12% of PF wages and the employer pays 12% more, into the employee’s UAN-linked account.
How the contribution works
- PF is calculated on PF wages up to a ceiling. The ceiling is ₹15,000 a month until the August 2026 salary month and ₹25,000 from the September 2026 salary month.
- Of the employer’s 12%, 8.33% goes to the pension scheme (EPS, capped at 8.33% of the ceiling) and the rest to the EPF account.
- The employer also pays 0.5% of PF wages (up to the ceiling) towards EDLI, the employee deposit-linked insurance.
- The contribution for a month is paid, with the monthly return (ECR), by the 15th of the next month.
Example from September 2026
For an employee whose PF wages are ₹30,000, wages above the ceiling are ignored: the employee and employer each pay 12% of ₹25,000, which is ₹3,000. The employer’s ₹3,000 splits into ₹2,083 for pension and ₹917 for the EPF account.
In AdviHR
AdviHR applies the ceiling that was in force for each salary month, uses the labour-code wage definition, and produces the ECR 2.0 file for the monthly return.
Frequently asked questions
What is the PF wage ceiling in 2026?
₹15,000 a month until the August 2026 salary month, and ₹25,000 from the September 2026 salary month.
How much PF does the employer pay?
12% of PF wages, split into 8.33% for pension (to its cap) and the remainder to the EPF account, plus 0.5% for EDLI.
Related terms
How sure are we? These figures use the same rules AdviHR payroll applies. We publish what has been checked against an official source and what has not, on the statutory accuracy page.
General information, not legal or tax advice. Confirm against the official notification and your adviser.