Provident Fund (PF)

Note: This topic keeps updating whenever a new payroll report is added to Keka

As of now, there are around 50 payroll reports available on Keka with many more coming soon.  To view the available reports, please go to Payroll >> Reports.

Few examples of payroll reports available on Keka:

Payroll:

• Current Salary Structure
• Current Salary With Bonus
• Employees Current CTC
• Expense Claim Report
• Financial Information
• Component break up for each employee (Pay Register)
• Contribution / Deduction Reconciliation Report
• Head Count Monthly Report
• Monthly Batch Payment – Bank Transfer, Cheque, Cash
• Payroll Journal Vouchers Report – Tally
• Salary Revision Report
• All Employee YTD Report

Income Tax:

• Annual Income Tax Report
• Annual HRA Reports
• Investment Declaration Summary Report
• Monthly Income Tax Statement

Provident Fund (PF):

• PF Remittance Report
• PF Monthly Electronic Return (ECR)
• PF Contribution card – Form 6A
• PF Joinee Statement – Form 5
• PF Exits Statement – Form 10
• PF Monthly Statement – Form 12A (Revised)
• Aadhar (UIDAI) submission Form
• PF Summary Report
• PF Arrear Report
• PF Admin Charges Report

Employees’ State Insurance (ESI):

• ESI Monthly Statement
• ESI Monthly Return (Electronic)
• Contribution Register (Form 5)
• ESI Overrides
• ESI Summary Report

Professional Tax (PT):

• PT Monthly Statement
• PT State Wise Report (Form 5)
• PT Override Report

 

If you are looking for any specific report, write to support@keka.com.

Employee and the Employer contribute 12% of your basic salary (plus dearness allowances, if any) into your EPF account.
The amount that the Employee contributes (12% of Basic) from his salary gets directly gets deposited in the EPF account, whereas, the Employer’s 12% contribution is distributed in 2 parts; 3.67% is deposited in EPF account and the remaining 8.33% is added to EPS (Employee Pension Scheme) account.

Apart from the 12% of EPF contribution, employer has to pay some other charges, the breakdown of which is given below

• EPF Administrative Charges (A/c No 2) – 0.65% of Basic
• Employees Deposit Linked Insurance (EDLI) (A/c No 21) – o.50% of Basic
• EDLIS Administrative Charges (A/c No 22) – 0.01% of Basic

The PF other charges are cumulative of EPF Admin charges, EDLIS and EDLIS admin charges, that totals to 1.16%.

Employees earning Basic (plus DA) Salary of more than Rs. 15,000/month can choose to contribute more towards their PF contribution. Instead of restricting the contribution to be 12% of (statutory minimum Basic) Rs. 15,000/month, they can choose to contribute 12% of their actual Basic (plus DA).

For example, if the Basic (plus DA) salary of employee is Rs. 25,000, he can contribute 12% of Rs. 25,000 instead of Rs. 15,000. This might lower the take-home salary, but will help the employee reduce the tax liability (The employer PF contribution is exempt from tax and employee’s contribution is taxable but eligible for deduction under section 80C of Income Tax Act).

Please note that the employer is not bound to match your contribution, and can limit his contribution to statutory minimum of Rs. 1800/month.

To configure employees’ PF contribution to be 12% of their actual Basic, follow the steps below:

Step 1: Go to Settings >> Payroll >> PF and ESI Settings

 

Step 2: On ‘Provident Fund & ESI Setting’ screen, choose the 2nd option that says ‘Allow PF calculated as percentage of Basic Salary beyond Statutory Minimum’.  Once this option is selected, it will calculate PF as 12% of Basic for all employees irrespective of the Basic (plus DA) amount.

In case, you want to limit the employer’s contribution amount per month, check the option that says ‘Pay Employer Contribution of Provident Fund outside the Gross Salary of an Employee’ and then choose the sub-option ‘Limit employer’s PF contribution amount maximum of ____ Monthly’. Fill in the blank with desired maximum monthly amount you wish to contribute.

Once done, click on ‘Complete’ button to save the settings.  The employees’ contribution will now be calculated as 12% of their actual Basic (plus DA).

Related:

How do I limit employees’ maximum monthly PF contribution to Rs. 1800?

What are other charges of Provident Fund? How is it calculated?

How to configure Employer’s PF contribution to be inside/outside of employee’s Gross Salary?

How to configure PF other charges to be inside/outside of employee’s Gross Salary?

Can PF contribution amount (of employee & employer) be over-ridden?

Can an employee opt-out of PF?

 

In case you are having trouble setting employees’ PF contribution, write to support@keka.com.

Employees earning Basic (plus DA) Salary of more than Rs. 15,000 can choose to limit his contribution to Rs. 1800/month and not contribute 12% of the actual Basic (plus DA) he is receiving. Though, this will increase the take-home salary, it will also increase the tax liability (The employer PF contribution is exempt from tax and employee’s contribution is taxable but eligible for deduction under section 80C of Income Tax Act).

To limit the employees’ maximum monthly contribution towards PF to Rs. 1800, follow the steps below:

Step 1: Go to Settings >> Payroll >> PF and ESI Settings

 

Step 2: On ‘Provident Fund & ESI Setting’ screen, choose the 1st option that says ‘Limit PF amount to statutory minimum salary for all employees’.  Once this option is selected, it will calculate PF as 12% of Basic for all employees whose Basic is less than or equal to Rs. 15,000/month, and limit to to Rs. 1800/month in case Basic salary goes beyond Rs. 15,000.

Once done, click on ‘Complete’ button to save the settings.  The employees’ contribution will now be restricted to Rs. 1800/month in case the Basic (plus DA) goes beyond Rs. 15,000/month.

Related:

How do I configure employees’ PF contribution to be 12% of their actual Basic and not limited to Rs. 1800 monthly?

What are other charges of Provident Fund? How is it calculated?

How to configure Employer’s PF contribution to be inside/outside of employee’s Gross Salary?

How to configure PF other charges to be inside/outside of employee’s Gross Salary?

Can PF contribution amount (of employee & employer) be over-ridden?

Can an employee opt-out of PF?

 

In case you are having trouble limiting employees’ maximum PF contribution, write to support@keka.com.

Changing Employees’ Salary Payment Mode

In situations where new employees join your organisation and don’t have a salary account yet, chances are that few initial months of salary is being paid out to them by cheque.  There can also be cases where the account information changed, or the mode of payment changed. In any such cases, it is required to update the salary payment mode details on Keka as soon as there has been a change, to avoid any issue that might arises due to this change.

To change the salary payment mode of an employee, please follow the steps below:

Step 1: Go to employee’s profile by typing the employee’s name in the search bar

 

Step 2: On employee’s profile, go to Finances >> Preferences tab

 

Step 3: Under Preference, go to ‘Salary Deposit’ section and you can view the current salary payment mode. Click on ‘Edit’ link if you wish to change the mode of payment or existing bank details (in case salary mode is Bank Transfer).

 

Step 4: On the new pop-up screen that appears, you can change the mode of payment, and add/edit account details (in case mode is Bank Transfer)

Once done with updating the salary payment mode details, click on ‘Update’ and this will add/update the information.

IMPORTANT: In case you want to update salary payment mode details for many employees (in bulk), write to support@keka.com and you will be provided with a custom link to do this.

 

Updating Employees’ Financial Information (PAN Information, Provident Fund, Aadhaar Information)

Though it is recommended to have all employees’ financial information with you during Keka setup/on-boarding, it is at times inevitable to have all these data at hand.  In such cases, it is recommended to update the financial information of employees as and when you have it available with you.

To update the financial information of an employee, please follow the steps below:

Step 1: Go to employee’s profile by typing the employee’s name in the search bar

 

Step 2: On employee’s profile, go to Finances >> Preferences tab

 

Step 3: Under Preference, you can find financial information sections (PAN Information, Provident Fund, Aadhaar Information) and option to edit them as well. Click on respective ‘Edit’ links to update the details.

Once done with updating the financial information, click on ‘Update’ button (for each section, i.e., PAN, PF and Aadhaar) and this will add/update the information for the employee.

IMPORTANT: In case you want to update financial information for many employees (in bulk), write to support@keka.com and you will be provided with a custom link to do this.

 

If you are having trouble updating the salary mode or financial details of your employees, write to support@keka.com.

Employees’ Provident Fund

Employees’ Provident Fund (EPF) is a retirement benefit scheme that’s available to all salaried employees. This fund is maintained and overseen by the Employees’ Provident Fund Organization (EPFO) of India. Any organisation employing 20 employees or more is required, by law, to register with the EPFO.

EPF is created with a purpose of providing financial security and stability. Employee contributes in fund on a regular basis (monthly in most cases), thus saving a fraction of their salary every month, to be used in an event that the employee is temporarily or no longer fit to work, or at retirement.

Is Provident Fund (PF) Contribution Mandatory?

Yes, contribution to PF is mandatory for employees who are earning Basic Salary (plus DA, if applicable) upto Rs. 15,000 per month.

Employees earning a Basic (plus DA) Salary of more than Rs. 15,000 can choose not to contribute to PF. Though, opting out of PF will increase your take-home salary, it will also increase your tax liability (The employer PF contribution is exempt from tax and employee’s contribution is taxable but eligible for deduction under section 80C of Income tax Act.). It is strongly recommended to contribute to PF, since it helps you lower your tax liability as well as build a huge corpus for retirement.

IMPORTANT: You can only choose to opt-out of the PF when you start your job. If you are new to job and your monthly Basic (plus DA) is more than Rs. 15,000, you can let your employer know that you don’t want to be part of PF scheme. If a person has been part of PF scheme once, he doesn’t have an option to opt-out of it.

What is the contribution rate (Employee & Employer) for EPF?

Employee and the Employer contribute 12% of your basic salary (plus dearness allowances, if any) into your EPF account.
The amount that the Employee contributes (12% of Basic) from his salary gets directly gets deposited in the EPF account, whereas, the Employer’s 12% contribution is distributed in 2 parts; 3.67% is deposited in EPF account and the remaining 8.33% is added to EPS (Employee Pension Scheme) account.

Apart from the 12% of EPF contribution, employer has to pay some administration charges.

Here’s a table with the breakup of EPF contribution:

Scheme	Employee Contribution	Employer Contribution
Employee Provident Fund (EPF)	12%	3.67%
Employees’ Pension scheme (EPS)	0	8.33%
Employees Deposit Linked Insurance (EDLI)	0	0.5%
EPF Administrative Charges	0	0.65%
EDLIS Administrative Charges	0	0.01%

Employee Pension Scheme (EPS)

• EPS amount is paid only by the Employer (8.33%).
• EPS can be withdrawn at the time of retirement.
• EPS amount cannot be contributed for the Employee who crosses the age of 50 years as he/she wouldn’t be able complete 10yrs of service.
• EPS cannot be collected from the employee who crosses the age of 58 years and is still working as an employee.
• No interest is earned on EPS.

Example of how the PF contributions are distributed for employee and employer:

Basic Salary of Employee is Rs. 10,000

12% of Employee’s contribution Rs. 1200 is saved in EPF Account

12% of Employer’s Contribution Rs. 1200 is divided as (8.33% for EPS i.e. Rs. 833 and 3.67% for EPF i.e. Rs. 367 which is equal to Rs.1200)

Admin charges are divided into (EDLI which is 0.65% i.e. Rs. 65, EPF Admin which is 0.5% i.e. Rs. 50 & EDLI Admin which is 0.01% i.e. Re. 1)

Can I contribute more than 12% towards my PF scheme?

You can contribute more than 12% towards your PF scheme. EPF gives option to employees to increase the contribution amount. It is known as Voluntary Provident Fund (VPF). Here are few points to be noted when it comes to contributing more towards your PF scheme:

• You can contribute up to 100% of your basic salary in EPF account.
• The employer is not bound to match your contribution.
• You will get the tax benefit under section 80C on extra contribution as well.
• The extra contribution becomes the part of your EPF account.
• The rules on loan, transfer and withdrawal of PF amount won’t change.

What are the tax benefits of PF contributions?

The employer PF contribution is exempt from tax, and employee’s contribution is taxable but eligible for deduction under section 80C of Income tax Act. The exemption limit under Section 80C is capped to Rs. 1,50,000.

Can I withdraw my EPF money if I am still working?

Though, EPF withdrawal is not permitted if you are still working. But there are exceptions when an Employee can withdrawal partial amount of his PF.

Here’s list of qualifying conditions, when you can withdraw your Provident Fund amount:

Marriage or education of self, your siblings, or children.

Conditions:

• Should have completed a minimum of seven years of service.
• Maximum amount you can withdraw is 50% of your contribution.
• Can be availed three times during your working life.
• Required to submit the ‘wedding invitation’ or a ‘certified copy of the fee payable’ as proof.

Medical treatment for Self or family (spouse, children, dependent parents)

Conditions:

• Major surgical operations, or for treatment of  TB, Leprosy, Paralysis, Cancer, Mental or heart ailments.
• Maximum amount you can withdraw is 6 times your salary
• Required to submit proof of hospitalisation for one month or more with leave certificate for that period from your employer.

Repay a housing loan for a house in the name of self, spouse or owned jointly

Conditions:

• Should have completed at least 10 years of service.
• Maximum amount you can withdraw is 36 times your salary.

Alterations/repairs to an existing home for house in the name of self, spouse or jointly

Conditions:

• Minimum service of five years after the house was built/bought.
• Maximum amount you can withdraw is 12 times your salary.
• Can be availed only once during entire service.

Construction or purchase of house, site or plot for self or spouse or joint ownership

Conditions:

• Should have completed at least five years of service.
• Maximum amount you can withdraw is 36 times your salary. To buy a site or plot, the amount is 24 times your salary.
• Can be availed only once during entire service.

Do I earn any interest on the EPF?

Yes. As decided by EPFO On 19 Dec 2016, the current EPF interest rate for FY 2016-17 is fixed at 8.65%. The rate of interest is not fixed at the beginning of each financial year. This is for the reason that EPFO gives interest according to the earned profit. This also means that the interest rate of EPF is declared for the outgoing/past financial year.

Related:

How do I limit employees’ maximum monthly PF contribution to Rs. 1800?

How do I configure employees’ PF contribution to be 12% of their actual Basic and not limited to Rs. 1800 monthly?

What are other charges of Provident Fund? How is it calculated?

How to configure Employer’s PF contribution to be inside/outside of employee’s Gross Salary?

How to configure PF other charges to be inside/outside of employee’s Gross Salary?

Can PF contribution amount (of employee & employer) be over-ridden?

Can an employee opt-out of PF?

 

In case you are facing trouble with PF configuration & calculation for your employees, write to support@keka.com.

The contribution payable to the Employees State Insurance Corporation (ESIC) in respect of an employee shall comprise of employer’s contribution and employee’s contribution at a specified rate. The rates are revised from time to time.

Current Contribution Rate for ESI:
Employee Contribution = 1.75% of the wages paid/payable in respect of the employees in every wage period.
Employer’s Contribution = 4.75% of the wages paid/payable in respect of the employees in every wage period.

For ESI calculation, the Gross salary comprises of all the monthly payable amounts such as Basic, Dearness Allowance, City Compensatory Allowance, HRA, Incentives, Attendance Bonus, Meal Allowance, etc. The Gross salary, however, does not include annual bonus, retrenchment compensation, encashment of leave and gratuity.

ESI Amount Calculation:

ESI amount is calculated on the Gross of an employee. If you are seeing a difference in value of ESI, and think that this might be an error, please check if the Employer’s share of PF and ESI is part of the Gross salary.  In case the employer’s share of PF and ESI is included in the Gross salary of employee, the ESI calculated might be on a higher side, since the Gross considered for calculation is also taking employer’s share (of PF and ESI) into account.

To confirm & exclude Employer’s share of PF and ESI from Gross for the purpose of ESI calculation, follow the steps below:

Step 1: Go to Settings >> Payroll >> PF & ESI Settings

 

Step 2: Under ESI Contribution, check the option ‘Exclude employer’s share from gross in ESI calculation’

Once done, click on ‘Complete’ button to save the settings.

Note: You will be required to ‘Preview run payroll’ again to see the updated ESI calculation.

IMPORTANT: Making change to exclude employer’s share for calculation will not affect any other salary settings and will only exclude employer’s share from Gross for the purpose of ESI calculation.

 

In case employer’s share of PF and ESI is outside Gross salary, and ESI calculation seems incorrect, write to support@keka.com.

Employees earning a Basic (plus DA) Salary of more than Rs. 15,000 can choose not to contribute to PF. Though, opting out of PF will increase your take-home salary, it will also increase the tax liability (The employer PF contribution is exempt from tax and employee’s contribution is taxable but eligible for deduction under section 80C of Income tax Act.).

Prerequisite to remove employee from PF contribution: ‘Opt-out from PF’ option should be enabled under PF settings.

To do this, go to Settings >> Payroll >> PF and ESI settings, and check the option under PF Contribution that says ‘Allow employee to override PF Contribution, opt-out from PF, limit to statutory pf’.

In case you wish to remove or opt-out an employee from PF contribution, follow the steps below:

Step 1: Go to Payroll >> Payroll Admin >> Provident Fund & ESI > Employee PF options

 

Step 2: On the next screen, click on ‘Change’ link against the employee for whom you want to disable the PF contribution.

 

Step 3: On the pop-up that appears, turn on the ‘Desired PF Override’ (toggle button) and update the value to ‘0’. Click on ‘Submit’ button and the PF contribution amount will be updated to ‘0’, thus disabling the PF contribution for the selected employee.

 

If you wish to do a bulk update/disable PF contribution amount, click on ‘Bulk Import’ link to download the Excel file template and update/disable PF contribution in bulk.

 

In case you are not able to disable PF contribution of employees, write to support@keka.com.