What type of account is provident fund?

What type of account is provident fund?

retirement savings scheme

Is Employee Provident Fund a liability?

Contribution towards the worker’s provident fund which is due at the end of each month is an external liability. However contributions made by employees towards Worker’s provident fund is not a liability as it not arising out of the past events or actions.

What is PF component?

Employer’s contribution is 12% of Basic salary + DA, the contribution is divided into 2 parts; 3.67% for EPF and 8.33% for EPS. Employees who are enrolled for EPF scheme are automatically enrolled for EPS scheme. Central government also contributes 1.16% of Basic salary + DA.

Is a provident fund a defined contribution?

As far as differences between gratuity and provident funds are concerned, although both types involve lump sum payments at the end of employment, the former operates as a defined benefit plan, while the latter is a defined contribution plan.

How much tax do you pay on your provident fund?

For amounts between R25,001 and R660,000 you will pay 18% of taxable income exceeding R25,000. For amounts between R660,001 and R990,000 you will pay R114,300 + 27% of taxable income exceeding R660,000. For withdrawals of more than R990,000 you will pay R203,400 + 36% of taxable income exceeding R990,000.

What is the rule for PF deduction?

For EPF, both the employee and the employer contribute an equal amount of 12% of the monthly salary of the employee. Employees can contribute more than 12% of their salary voluntarily, however the employer is not bound to match the extra contribution of the employee.

What are the provident fund rules?

Any company with 20 or more employees is enabled with the option to deduct EPF. For EPF, an employee contributes 12 per cent of the basic salary while the employer contributes 8.33 per cent towards Employees’ Pension Scheme and 3.67 per cent to employees’ EPF.