EPF (Employees’ Provident Fund)
The Employees' Provident Fund (EPF) is a retirement savings scheme under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, managed by the Employees' Provident Fund Organisation (EPFO). Both employee and employer contribute 12% of the employee's basic salary plus dearness allowance to the fund each month.
Of the employer's 12% contribution, 8.33% is diverted to the Employees' Pension Scheme (EPS), capped at a pensionable wage of ₹15,000, while the remaining 3.67% goes to the EPF account along with the employee's full 12%. EPF applies mandatorily to establishments with 20 or more employees, and the accumulated corpus, along with interest (8.25% for FY 2025-26), is payable on retirement, resignation, or specific withdrawal conditions.
Key points
- ✓ Employee contributes 12% of Basic + DA; employer also contributes 12%
- ✓ Employer's 12% splits into 8.33% to EPS (capped at ₹15,000 wage) and 3.67% to EPF
- ✓ Mandatory for establishments with 20 or more employees
- ✓ Interest rate is notified annually by EPFO (8.25% for FY 2025-26)
- ✓ Withdrawals are tax-free after 5 years of continuous service
Example
For an employee with a basic salary of ₹20,000, the employee's EPF contribution is ₹2,400 (12%), while the employer contributes ₹2,400 in total, split as ₹1,250 to EPS (8.33% of the ₹15,000 capped wage) and ₹1,150 to EPF.
Frequently asked questions
Is EPF mandatory for all employees?
Can I withdraw my full EPF balance before retirement?
How do I calculate EPF contribution quickly?
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