Quick Answer: EPF contribution: both employee and employer contribute 12% of basic salary + DA. Of the employer's 12%: 8.33% goes to EPS (Employee Pension Scheme, capped at ₹15,000 basic) and 3.67% to EPF. The employee's full 12% goes into EPF. Current EPF interest rate is 8.25% p.a. for FY 2024-25. Maturity is tax-free if service is 5+ years.
EPF — India's Most Important Retirement Scheme
The Employee Provident Fund (EPF) is a mandatory retirement savings scheme for employees earning up to ₹15,000 basic salary (employers with 20+ employees). Both employee and employer contribute 12% of basic + DA each month. The current interest rate of 8.25% makes EPF one of the best risk-free returns available.
EPF Contribution Structure
| Contributor | Rate | Goes To |
|---|---|---|
| Employee | 12% of Basic+DA | EPF Account |
| Employer | 3.67% of Basic+DA | EPF Account |
| Employer | 8.33% of Basic+DA (max ₹1,250/mo) | EPS (Pension Scheme) |
| Government | 1.16% (below ₹15K salary) | EPS |
Frequently Asked Questions
Full EPF withdrawal is allowed at retirement (58 years) or 2 months after leaving employment without joining a new job. Partial withdrawals are allowed for specific purposes: medical emergency, house purchase/construction, children's education, and marriage.
EPF enjoys EEE (Exempt-Exempt-Exempt) status: Employee contribution (up to ₹1.5L/yr) is deductible under 80C, interest earned is tax-free (on contributions up to ₹2.5L/yr), and withdrawal after 5 years is tax-free. Contributions above ₹2.5L/yr interest becomes taxable from FY 2021-22.