Payroll

Provident Fund

Setup Provident Fund (PF)

Set up and process provident fund calculations in RazorpayX Payroll.

Employee Provident Fund (EPF)

is a joint contribution made by both the employer and the employee. The employer contributes 12% of the employee’s basic salary and dearness allowance to PF. It is mandatory for all organisations to allocate EPF as part of an employee’s CTC.

Watch Out!

Automated Provident Fund (PF) payments and employee registration are temporarily unavailable on Payroll. Manually register employees and make payments by the 15th of the following month. Know more about the

PF rule change

.

Register Employees for PF

Know how to register employees for PF via EPFO. You can register employees with UANs or generate UANs for employees.

Make PF Payments via EPFO

Check how to download PF ECR file from the Payroll Dashboard and make PF payments for employees via EPFO.

EPF Eligibility

Employers and organisations qualify to contribute to EPF when any of the following conditions is true:

  • The employee earns less than ₹15,000 per month.
    • EPF is also available for employees earning more than ₹15,000.
  • The employee has contributed to PF before through any past employer.
  • The company has more than 20 employees.

Organisations under 20 employees are not mandated to contribute to the EPF. However, such an organisation can still enable it voluntarily.

How PF is Calculated

PF Wages refer to the employer's contribution to EPF and basic salary. It is calculated basis the employee's basic salary and allowances (excluding HRA).

  • If employee's basic salary is less than ₹15,000, PF Wages = Gross Pay (Basic + (Dearness Allowance) DA + Special allowances) - HRA
  • If employee's basic salary is more than ₹15,000, PF Wages = Dearness Allowance
  • If employee's basic salary is more than ₹15,000, and you

    enforce PF upper limit

    of ₹15,000, PF Wages = ₹15,000.

This means that employers contribute a percentage of ₹15,000 towards EPF.

PF Contribution

The total 12% contribution from employer is divided into multiple categories. They include:

Employer's contribution to PF is only 3.67%. The remaining amount is added to Employee Pension Scheme (EPS).

The employee's contribution of 12% is added entirely to the Employee's Provident Fund (EPF).

Watch Out!

As of 2019, all allowances, excluding the House Rent Allowance (HRA), are considered PF wages. PF contribution must be calculated as the sum of basic salary and all other allowances, after excluding HRA.

In specific cases, the employer can contribute only 10% to EPF instead of 12%. This is when:

  • The number of employees is less than 20.
  • The company incurs more losses than its net worth.
  • The company is involved in the beedi, jute, brick, guar gum, and coir industries.

To bridge the gender gap, some companies contribute 8% of new women employees' contribution towards EPF while maintaining 12% of the employer's contribution.

Setup PF

You must set up PF organisation on the Payroll Dashboard to collect employee information and process PF.

Watch Out!

  • You must handle employee registration and monthly Provident Fund payments externally.
  • By default, Payroll calculates PF on all wages (except HRA). You can change this configuration. However, Payroll is NOT responsible for any compliance issues resulting from this. Know more about

    PF Calculation

    .
  • Ensure you set up PF for your organisation before adding employees.

  1. Log into the

    Payroll Dashboard

    .

  2. Go to Settings → Payments & Compliance Setup. Click EDIT.

    EDIT on Payroll Dashboard Settings > Payments & Compliance Setup

  3. On the Payments Settings page, navigate to the PF Settings section.

  4. Select the relevant check boxes to enable or disable PF Settings. You can choose to:

    • Include

      employer's contribution

      in employee's CTC.
    • Include PF EDLI and

      admin charges

      in employee's CTC.
    • Use only basic salary to calculate PF.
    • Use PF limit as ₹15,000 when calculating PF contributions.
    Payroll Dashboard Setup PF

  5. Click CONTINUE.

You have successfully set up PF payments for your organisation and employees.

Register Employees

You must register your employees for PF individually. You can register employees for Provident whose UAN is already available, and generate UAN for new employees as well.

There are two steps to individually register employees for Provident Fund:

1. Configure PF for Employees

To configure employee-level PF settings:

  1. Log into the

    Payroll Dashboard

    .

  2. Navigate to People from the left menu.

  3. Open the employee's profile and navigate to Provident Fund, Professional Tax & ESI. Click EDIT.

  4. In PF Status, select Opt In. Enter the UAN in the Provident Fund UAN text box.

    If the employee does not have a UAN, follow the steps to register employees for PF on the EPFO portal.

    specific and meaningful image title

  5. Click CONTINUE.

This saves the employee's UAN on the Payroll Dashboard.

2. Employee Registration on EPFO

When a new employee joins your organisation, you must either generate a UAN for that employee or map their existing UAN to your organisation.


Video Tutorials

Read the documentation below or watch the video tutorials on how to:

To register employees for PF on the EPFO portal:

  1. Log in to the EPFO portal using your credentials. You can also retrieve your credentials from Company Details → External Credentials on the Payroll Dashboard.
  2. Enter the OTP sent to your registered mobile number to authenticate your log in.
  3. On the EPFO website, navigate to Member in the top menu. Click REGISTER INDIVIDUAL in the drop-down menu.
    EPFO portal Payroll make PF payments
  4. On the Member Registration page and section:
    • Select the Yes option for Previous Employment/UAN if the UAN if is already available for the employee.
    • Select the No option to register the employee for PF.

      1. Provide the employee's identity details such as Name and Date of Birth as on Aadhaar, Gender, Father/Husband's Name, Nationality, Religion, Marital Status and more.

      2. Enter the Date of Joining and Monthly EPF Wages as on Joining. The monthly wages are as decided during

        PF setup

        .

        Payroll Register employee for PF New UAN
  5. In the KYC Details section, select the Document Type to verify employee details. Employee's Aadhaar is mandatory.

    1. Select the check boxes for the documents you choose to upload.

    2. Enter the DOCUMENT NUMBER. For Aadhaar, you must enter the employee's Aadhaar number.

    3. Enter the Name as per Document.

      specific and meaningful image title
  6. Select the check box to affirm that you have the employee's consent to upload the above information. Click Save.

This completes the registration process. Employee's details are now moved to the Member details pending for approval section. You can also edit or delete the registration as necessary. You must now approve the changes.

  1. Navigate to Member in the top menu. Click APPROVALS.

  2. On the Pending page, review the details and click Approve.

    Approve changes on EPFO

You have successfully registered your employees for PF via your organisation. Add the UAN on the employee's profile on the Payroll Dashboard.

Manage PF Payments

Make PF Payments on EPFO

Payroll is unable to automate PF payments due to the EPFO 2FA login. Know more about the

PF login rule change

.

Watch Out!

Ensure you make the pending PF payments for August before September 15, 2024.

Watch the video tutorial on how to make payments for all employees on the EPFO portal or read on.

There are two steps to make PF payments on the EPFO portal:

1. Download PF ECR .txt File

  1. Log into the

    Payroll Dashboard

    .
  2. Navigate to ADMIN OPTIONS → Pay Employees → Run Payroll.
  3. Click Email ECR File.

This emails the PF ECR .txt file to your registered email address. You must now validate and verify this file on the EPFO portal.

2. Upload, Validate & Verify ECR File on EPFO

  1. Log in to the EPFO portal using your credentials. You can also retrieve your credentials from Company Details → External Credentials on the Payroll Dashboard.
  2. Enter the OTP sent to your registered mobile number and authenticate your login.
  3. On the EPFO portal, navigate to Payments tab in the top menu → ECR/RETURN FILING in the drop-down menu.
  4. Go to ECR Quick Links and click ECR Upload.
    EPFO ECR file upload
  5. On the ECR Upload page, enter the following:

    1. Wage Month. Select the payroll month, For example, August 2024.

    2. Salary Disbursal Date.

    3. Select File. Upload the .txt ECR downloaded from the Payroll Dashboard.

    4. File Type. Select ECR.

    5. Contribution Rate %. Select the number from the drop-down menu to indicate the percentage of employer's contribution. For example, 12%.

    6. Remarks. Specify the payroll month, or any other remarks.

      Update ECR details
  6. Click Upload.

This successfully submits your organisation's ECR file for validation. The processed ECR file now moves to Draft ECR's.

  1. In the Draft ECR's: section, click the download icon in the ECR Statement column.

  2. Verify the ECR Statement. Click Verify in the Action column to proceed.

    Payroll PF ECR validation

This successfully validates the ECR file. You can now prepare the PF challan to make the payment.

  1. In the In-Process ECR's section, click Prepare Challan in the Action column.

    EPFO click Prepare Challan

  2. The Summary of Electronic Challan cum Return (ECR) page opens. Here:

    1. Review the ECR details.
    2. Go to the Employer details section at the bottom of the challan.
    3. Enter the Total number of Employees in the month. These are the number of employees for whom ECR is generated.
    4. Provide the Number of excluded employees who are part of your organisation but are not present in the ECR file.
    5. Enter the Gross wages of the Excluded employees. If two employees were excluded, provide the sum of their wages.

  3. Click Generate Challan at the bottom of the page.

    Generate challan EPFO

This successfully finalises the challan. Click Pay in the Payment column to make the PF payment.

On the Challan Payment page:

  1. Select the bank from the drop-down menu to make the PF payment from.
  2. Click Continue.
  3. Log in to your banking account and complete the payment.

You have successfully made the PF payments for your employees.

Calculate PF

PF contributions on Payroll are calculated as 12% of all fixed wages (except HRA). You can set a PF capping to see how the 12% calculation reflects as part of the basic salary.

When enabled, Payroll will cap the fixed wages at ₹15,000. The maximum contribution calculated by Payroll will be 12% of ₹15,000, which is ₹1,800. This ₹1800 will be credited.

If you have not set a cap, the Payroll will calculate PF at 12% of basic salary, assuming it is above ₹15,000.

Additional Charges

Employers’ contribution towards PF can be greater than 1%, depending on whether you choose to include and

allocate EDLI and admin charges

in the employee’s CTC.

The EPFO imposes a minimum of ₹500 as administration charges. If you have fewer than 7 employees, Payroll charges you this amount separately.

Delayed Payments

Your organisation must make Provident Fund contribution payments on or before the 15th of the following month. For example, your January contribution to EPF must happen before February 15.

If the PF payment is pending, EPFO sends notices with delayed amount payable under Damages (Section 14B) and Interest (Section 7Q). These delays occur due to the following reasons:

Non-registration/Delayed registration of employees

In some cases, new/existing employees' PF registration may be pending. Even though the salary is processed, the PF payment remains on hold due to incomplete PF/UAN information. Know more about

enabling compliances

.

To resolve this:

  1. Log in to the

    Payroll Dashboard

    .
  2. Go to People from the left menu → employee/s profiles → Provident Fund, Professional Tax, ESI & LWF.

Check the status of your employee/s PF registration and ensure you complete it before the payroll execution date of the respective month.

Delayed Salary Execution

Delayed salary processing can create delayed PF payments as the PF payment is made after the PF contribution due date (15th of the following month). For example, PF payment due for January 15 and is paid on January 20 creates delays in the PF payments.

To resolve this:

  1. Log in to the

    EPFO portal

    .
  2. Navigate to to the PAYMENTS page from the drop-down menu on the portal.
  3. Click Prepare 7Q-14B Challan against Damages and Interest in the ECR Quick Links table and pay the delayed PF payments amount.

Voluntary Provident Fund

Organisations contribute to Voluntary Provident Fund (VPF) on the employee's behalf as an additional benefit over and above the mandatory Employee Provident Fund (EPF) contribution. VPF is a tax-saving instrument that you can enable upon employee's request.

To enable VPF:

  1. Log in to the

    Payroll Dashboard

    .
  2. Follow the steps to

    revise salary

    . On the Revise Compensation page:
    1. Expand the Add Voluntary PF (VPF) drop-down field and enter the monthly VPF contribution.
      Add VPF contribution Payroll Dashboard
    2. Click NEXT to save and click Confirm to revise the employee's salary.

This successfully saves the VPF contribution amount. Your employees can request changes in their contribution amount via Tax Deductions on the Payroll Dashboard.

Related Information

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