Journal entry for Provident Fund Contribution

Journal entry for Provident Fund Contribution

There are two types of contribution for provident fund.

Employee contribution

This kind of contribution is normally deducted from salary at the time of salary preparation. The following transaction would be passed.

Salary (Dr)
Provident Fund (Cr)

At the time of transfer of payment from operation account to provident fund account

Provident fund Bank A/C (Dr)
Operation Bank A/C        (Cr)

Employer Contribution

This is the equal amount contributed by employer in provident fund account. The following entries will be passed by the entity while contrition is made to the provident fund account.

Employer contribution (Dr)
Employee provident Fund (Cr)

Provident fund Bank (Dr)
Operational Bank (Cr)