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What is PF in Salary? Everything about PF You Should Known

A provident fund is an important retirement savings scheme that provides economic safety to employees. It is a type of investment that requires a worker to set their portion of income aside in a fund so they will use it later to meet their financial needs after retirement. There are different types of provident funds. 

Understanding the different types of provident funds and the way they work is important. In this article, we are going to tell you about provident funds, types of provident funds, its benefits, eligibility, important documents, how to claim PF, etc. So keep reading the article to get complete information.

What is PF in Salary?

PF in income refers to an important contribution made by both employers and employees toward a retirement savings scheme governed by the authorities of India. It is a retirement scheme that is maintained at some stage in the working years to ensure that there are enough funds during retirement.

Having PF in salary slip is beneficial in the future because it helps to create the retirement corpus in which making withdrawals for the total amount is possible after retirement. The amount in the provident fund commonly consists of the company’s contributions and interest rate free from profits tax.

Also Read:- What is Dearness Allowance in Salary Slip | What is HRA in Salary Slip | What is Travel Allowance in Salary Slip

Types of Provident Funds

You can be eligible for different types of provident funds depending on the nature of your employment. Here are the various types of provident funds available in India.

Types of PF

Statutory Provident Fund

Statutory Provident Funds is also known as General Provident Funds (GPF), are set up under Provident Funds Act 1925. It’s supposed to be for authority employees, authorized establishments and universities, railways, and other companies. Eligible employee’s contributions to the SPF or GPF account earn interest on the rate fixed by the government. 

Recognized Provident Fund

This type of provident fund is given to employees of private firms with more than 20 employees. Here, agencies and institutions can either install their own PF or they can choose the option to enroll in an approved scheme. If an enterprise chooses the previous course of action, the PF considers they need to be authorized by the Commissioner of Income Tax (CIT).

Unrecognized Provident Fund

In the above case, if the Commissioner of Income Tax (CIT) disapproves of the provident fund scheme, it was referred to as an unrecognized fund.

Public Provident Fund

This type of provident fund is to be handed to the public. You can invest in a PPF scheme, no matter what the nature of your employment. With this, you can spend money on PPF if you are salaried, self-hired, or maybe unemployed for a time. 

Benefits of Provident Fund

EPF is a retirement scheme that ensures that employees hold enough funds throughout their retirement time. Anyone running for a government or personal business can take advantage of the scheme. After knowing what PF is, you should know about its benefits. 

  • Loan Against the PF: A PF account holder is eligible for a loan against their PF stability under emergencies. However, the debtors have to repay the amount in 3 years of loan disbursal. 
  • Free Insurance: If the employee passes away during employment, they get free coverage of up to ₹ 7 Lakh under the EDLI (Employees Deposit Linked Insurance) scheme. Moreover, the PF account holder has to make a contribution to the insurance premium for the demise cover.  
  • Housing Loan: A PF account holder can withdraw as much as 90% of their overall PF stability for buying or building a new home. According to the EPF guidelines, an account holder also can take a Home Loan to buy land.
  • Partial Withdrawal for Financial Emergencies: Under medical emergencies or different unique situations, the PF account holder can withdraw their PF stability to handle the state of affairs.
  • A Provision for Pension: A PF account holder is eligible to get a pension after 58 years of age. To qualify for the pension, they have to make contributions to their PF account for a minimum of 15 years. The main advantage of the pension comes from the company’s contribution toward the EPF account. It is because 8.33% of their total PF contribution goes to the EPF account, benefitting the employee.

Eligibility Criteria for Employee’s Provident Fund

EPF full form is Employees Provident Fund (EPF), a category of Provident Fund Schemes. EPF scheme is issue to candidates who meet the following eligibility criteria 

  • All states in India can get provisions of the EPF scheme.
  • EPF account registration is mandatory for salaried employees with an income of as much as ₹ 15,000. 
  • Employees with an income of more than ₹ 15,000 can also apply for an EPF account to get approval from the Assistant PF Commissioner.
  • Organizations with more than 20 employees must sign up for the EPF scheme.
  • Organizations with less than 20 employees may join the EPF scheme.

Provident Fund contribution

PF contribution paid by employer and employee is 12% of (basic salary + allowance). Equal contribution is payable by worker and company. In case of institutions which employ much less than 20 employees or meet conditions, as according to the EPF rules, the contribution rate for both worker and the employer is set to 10%. For most employees working in a personal area, it’s the basic salary on which the contribution is calculated.

It is essential that employees’ withdrawal less than Rs 15,000 per month, to become eligible for EPF. As per suggestions in EPF, a worker, whose ‘basic pay’ is more than Rs. 15,000 per month, at the time of joining, isn’t required to make PF contributions. However, an employee who withdraws a pay of more than Rs 15,000 can still become a member and make PF contributions, through consent of the Employer and Assistant PF Commissioner.

How to Calculate PF on Salary?

The Indian government sets up policies to calculate the funds to be allotted to the EPF account. It is assigned to an account in which the employees and the employers deposit the PF amount. Each worker’s PF contains types of contributions: the employee’s and the company’s contributions.

  • The Employee’s EPF Contribution: The employees need to make a contribution 12% in their basic salary and Dearness Allowance every month to the PF account. For example, if an operating person’s basic monthly salary is ₹ 15,000, their monthly contribution towards the EPF account will be 12%, which is ₹ 1,800. 
  • The Employer’s EPF Contribution: Out of 12%, the employer contributes 8.33% to the Employees’ Pension Scheme and the remaining 3.67% to the EPF. Therefore, 3.67% of ₹ 15,000 might be ₹ 550. Therefore, the monthly EPF contribution for an employee income amount of ₹ 15,000 could be ₹ 2,350. 
Contribution ByContribution Per Month
Total Contribution24%

Also Read:- How To Calculate HRA in Salary

How to Calculate PF Amount at Retirement?

Those who want to know how to calculate PF need to follow these steps to determine the total amount they will get at retirement.

  • Enter the employee’s date of birth and retirement of 58 years in the given field.
  • Input the basic monthly salary and the growth in a year.
  • Provide the workers and the company’s contribution amounts.
  • Offer the federal authorities interest rates earned at the EPF balance.
  • Use the EPF calculation system to complete the calculation and get the final result based on this information.

Steps to Claim Provident Fund

To claim the PF online, you need to follow the steps mentioned below 

  • Obtain UAN (Universal Account Number): Log in to the EPFO portal and obtain your UAN if you have not.
  • Check Eligibility: Ensure you meet the eligibility criteria for claiming PF, which include unemployment for more than two months.
  • Fill out Form Online: Log in to the EPFO portal and fill out the PF withdrawal form.
  • Submit Required Documents: Upload necessary documents like an Aadhaar card, PAN card, bank details, and canceled cheque.
  • Track Claim Status: Monitor the status of your claim online on the EPFO portal.
  • Receive Funds: Once authorized, the PF amount may be deposited into your bank account.


Provident funds are a funding price range for long-time financial savings, mainly for retirement. In India, there are different types of provident funds that exist on the basis of employment categories, which include Statutory Provident Fund, Recognized Provident Fund, Unrecognised Provident Fund, and Public Provident Fund. Understanding these funds is vital for effective financial planning and a stable future.


What is a Provident Fund and the way it works?

An Employee Provident Fund (EPF) is a retirement savings plan for salaried employees who work for a company with 20 or more employees. Overall, the Employee Provident Fund is a good method to save some money for retirement. It also works as an emergency fund if you need money for medical expenses, a wedding, or loan payments.

Is PF mandatory for income below Rs. 15,000?

If you are a salaried employee incomes at least Rs. 15,000 per month (basic salary + dearness allowance), your company is needed to sign up an EPF account for you.

When can I withdraw my PF?

Only once you retire can you withdraw your complete PF stability. Only once you reach the age of 55 will you retire. You will not be able to get your pension in case you retire earlier than reaching this age. However, 365 days earlier than you retire, you may get 90% of your EPF plan.

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