PF Entry in books of Employee

This query is : Resolved

Quick Summary

In employee books, only employee PF contribution is relevant and usually not shown as receivable. Employer PF contribution is not recorded as receivable in employee accounts. It is maintained by employer PF trust, while employee contribution is deducted from salary.

virat

virat (Querist)
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14 November 2020 Dear Sir/Madam
What entry can be passed if Employee contributes to Provident Fund From his salary and also employer contributing pf in that account? ( in the books of EmployEE)
and also suggest which amount can be shown as receivable in the balance sheet( means the total of employee-employer contribution or else only employee contribution?)

Eswar Reddy S

Eswar Reddy S (Expert)
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14 November 2020 Generally salary category is not required balance sheet unless the salary is above 50lacs.

Eswar Reddy S

Eswar Reddy S (Expert)
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14 November 2020 Incase if balance sheet is required entire PF is should be considered in deposits assets.

Eswar Reddy S

Eswar Reddy S (Expert)
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14 November 2020 Alternatively you may adjust in capital if the employee has proprietorship business

virat

virat (Querist)
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17 November 2020 Dear Sir,
I want entry of PF contribution made by employer to employee in the books of employee.
please suggest accordingly.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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10 August 2024 When dealing with Provident Fund (PF) contributions in the books of the employee, it's important to distinguish between the employee's own contributions and the employer's contributions. Generally, in an individual’s personal accounting records, the employer’s contributions would not appear as a receivable since it’s not directly within the individual’s control or responsibility to account for the employer’s contributions. However, the employee should keep track of their own contributions for personal financial planning.

Here’s how you can handle the accounting entries for PF contributions:

### **1. Employee's PF Contributions:**

When an employee contributes to the PF from their salary, the entry in the employee's personal books would generally not involve a separate accounting entry. Instead, it is recorded by the employer.

**Example Entry for Employee Contribution (in the employer’s books):**
- **Debit:** Provident Fund Expense (Employee’s Contribution)
- **Credit:** Provident Fund Payable (Employee’s Contribution)

### **2. Employer’s PF Contributions:**

Employer contributions are made on behalf of the employee, and the employee generally does not need to account for this directly. However, if you are looking at the personal financial impact:

**Example Entry for Employer Contribution (in the employer’s books):**
- **Debit:** Provident Fund Expense (Employer’s Contribution)
- **Credit:** Provident Fund Payable (Employer’s Contribution)

### **Balance Sheet Presentation:**

For an employee's personal financial records:

- **Receivables:**
- **Employee Contribution:** If the employee is keeping track of their own PF contributions for their records, the amount shown as receivable in the balance sheet would only be the employee’s contribution if there’s a situation where the amount needs to be shown separately.
- **Employer Contribution:** The employer's contribution is typically managed by the employer and would not appear on the employee’s personal balance sheet.

**Total PF Contribution on Balance Sheet:**
- **Employee Contribution:** This is shown in the personal records of the employee.
- **Employer Contribution:** Not typically shown in the employee’s balance sheet but is a part of the PF fund maintained by the employer.

### **Example of Employee's Personal Record Entry:**

1. **PF Contribution Deducted from Salary:**
- **Debit:** Provident Fund Contribution (Personal Account)
- **Credit:** Bank (for the amount deducted from the salary)

2. **Tracking in Personal Financial Statement:**
- **Receivable Amount:** You would typically list the total amount of PF contributions, both employee and employer, if you are keeping personal records or in your financial planning.

### **Summary:**

In the books of the employee:
- The employer’s contribution to PF is not directly recorded.
- The employee’s own PF contribution is generally recorded as a reduction from their salary or bank account, but it is not shown as a receivable from the employer.

For precise and personalized advice, especially if accounting entries are being managed for specific compliance or financial planning, consulting a professional accountant or financial advisor is recommended.

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