How to calculate PF for contract workers
PF is worked out on PF wages, not on full pay. This guide shows you how to find PF wages and split the worker and employer share, with two worked examples.
Step 1: Find the PF wages
PF wages are Basic + DA (dearness allowance). Under the new 50% rule, some allowances may also come in.
The rule is simple. If allowances like HRA, conveyance and overtime are more than half of total pay, the extra part is added back to PF wages.
| Example | Amount |
|---|---|
| Basic + DA | ₹10,000 |
| Allowances (HRA, conveyance and others) | ₹14,000 |
| Total pay | ₹24,000 |
| Half of total pay | ₹12,000 |
| Extra allowance above half (₹14,000 − ₹12,000) | ₹2,000 |
| PF wages (₹10,000 + ₹2,000) | ₹12,000 |
Step 2: Know the rates
| Part | Who pays | Rate |
|---|---|---|
| Worker share | Worker (cut from pay) | 12% of PF wages |
| EPS (pension) | Employer | 8.33%, on wages up to ₹25,000 (at most ₹2,083) |
| EPF | Employer | The rest of 12% (3.67% when wages are up to ₹25,000) |
| EDLI (insurance) | Employer | 0.5%, on wages up to ₹25,000 |
| Admin charges | Employer | 0.5%, on wages up to ₹25,000. At least ₹500 a month for the establishment |
The PF wage ceiling (limit) is ₹25,000 a month from 17 September 2026. It was ₹15,000 from 2014.
Rates as of 21 October 2026. In our examples we round to the nearest rupee.
Step 3: Work it out
Find the worker share first. Then find EPS. EPF is the worker share minus EPS.
| Item | Example A: ₹18,000 | Example B: ₹30,000 |
|---|---|---|
| PF wages used | ₹18,000 | ₹25,000 (limited) |
| Worker share 12% | ₹2,160 | ₹3,000 |
| EPS 8.33% | ₹1,499 | ₹2,083 |
| EPF (12% minus EPS) | ₹661 | ₹917 |
| EDLI 0.5% | ₹90 | ₹125 |
| Admin 0.5% | ₹90 | ₹125 |
| Total employer cost | ₹2,340 | ₹3,250 |
In Example B, PF is limited to ₹25,000. If you pay PF on the full ₹30,000, the worker pays ₹3,600. EPS stays at ₹2,083, and the rest of the employer share (₹1,517) goes to EPF.
Special cases to watch
Per-day workers
Work out PF on the wage earned for the days worked. Example: ₹600 a day × 26 days = ₹15,600. Worker share is ₹1,872. EPS is ₹1,299 and EPF is ₹573.
Workers above 58
No EPS after age 58. The full employer 12% goes to EPF.
September 2026
This month is split. For 1–16 September use the ₹15,000 limit. For 17–30 September use ₹25,000.
Admin charges minimum
Admin charges are at least ₹500 a month for the whole establishment. If your total is less, you still pay ₹500.
Step 4: Pay and file on time
- Check each UAN. UAN (Universal Account Number) is the worker's PF number for life. Every worker needs one.
- Make the ECR file. ECR is the monthly PF return file. See how to upload the PF ECR file.
- Upload and pay. File the ECR on the EPFO Unified Portal, then pay the challan online. Do this by the 15th of the next month.
Want a quick check for one worker? Try our free PF and ESI calculator. Check with your auditor if you are unsure about any wage part.
Doing this for many workers?
ContractPay works out PF for every worker from the same month's salary. It makes the PF ECR text file for the EPFO portal, plus an Excel so you can check it first. You still upload the file and pay on the portal. See PF and ESI software for contractors.
Questions people ask
Is PF worked out on the full salary?
No. It is worked out on PF wages, which are Basic + DA plus any amount added back under the 50% rule.
What is the most EPS the employer pays for one worker?
EPS is 8.33% on wages up to ₹25,000. So it is at most ₹2,083 a month.
Is PF compulsory for every contract worker?
PF is compulsory for workers with PF wages up to ₹25,000. Above that, PF may be limited to ₹25,000.
Why does September 2026 look different?
The limit went up on 17 September 2026. So 1–16 September uses ₹15,000 and 17–30 September uses ₹25,000.
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