Section 6 of EPFMA : Section 6: Contributions And Matters Which May Be Provided For In Schemes

Explanation using Example

Imagine a company, XYZ Tech, which employs software engineers. The company is required to contribute to the Employees' Provident Fund (EPF) for each of its employees. As per Section 6 of The Employees Provident Funds and Miscellaneous Provisions Act, 1952, XYZ Tech must pay a contribution to the EPF that is 10% of the basic wages, dearness allowance, and retaining allowance (if any) payable to each employee.

For example, if an employee, John, has a basic wage of ₹30,000 per month, and a dearness allowance of ₹5,000 per month, the total contribution by XYZ Tech to John's EPF would be 10% of (₹30,000 + ₹5,000), which amounts to ₹3,500. John is also required to contribute the same amount to his EPF account.

If John wishes, he can contribute more than the required 10% to his EPF account, but XYZ Tech is not obligated to match any contribution above the required 10%.

In a different scenario, if the Central Government specifies that for the software industry the contribution should be 12% instead of 10%, then XYZ Tech would have to contribute 12% of the basic wages and allowances, which in John's case would be 12% of ₹35,000, amounting to ₹4,200.

Lastly, if the contribution calculation leads to a fraction of a rupee, the EPF Scheme may allow this to be rounded off to the nearest rupee, half rupee, or quarter rupee, as per the Scheme's provisions.