Provident Fund
Also called: PF, EPF, Employees Provident Fund
What is Provident Fund?
The Employees' Provident Fund is a statutory retirement scheme where both employee and employer contribute a percentage of basic pay plus dearness allowance each month, and the accumulated balance earns interest.
Why Provident Fund matters
PF is a legal obligation once thresholds are met, and it is one of the most closely enforced. It also represents a real cost in CTC and a real deduction from take-home pay.
Provident Fund formula
Employee contribution = 12% of basic plus DA
The employer contributes an equal amount, part of which is directed to the pension scheme.
How Provident Fund works in practice
Deposit within the monthly deadline and file the return; delays attract interest and damages. Employees can track their balance against their universal account number, which follows them across jobs.
Frequently asked questions
It applies once the establishment crosses the prescribed employee threshold, with voluntary coverage possible below it.