Quick answer: you contribute 12% of basic pay plus DA to EPF every month. Your employer also contributes 12%, but 8.33% of wages up to ₹15,000 (at most ₹1,250 a month) goes to the Employees' Pension Scheme and only the remainder goes to your EPF account. On ₹30,000 basic, ₹3,600 comes from you, ₹2,350 from your employer into EPF and ₹1,250 into EPS. Interest for FY 2025-26 is 8.25%.
Project your balance with the EPF calculator. This guide explains every part of the calculation.
Who contributes
The Employees' Provident Fund is run by EPFO. It is compulsory for establishments with 20 or more employees and for employees earning wages up to ₹15,000 a month. Employees earning more can be enrolled too, and most organised-sector employers enrol everyone.
Wages for PF means basic pay, dearness allowance and retaining allowance. Under the labour codes, if allowances exceed half of total pay, the excess is added to wages, which has pushed up PF for many employees.
HR, GPS attendance, shifts, leave, payroll, tax declarations, onboarding, engagement, projects and timesheets — one employee record behind all of it.
Start free See the demoThe contribution split
| Contribution | Rate | Goes to |
|---|---|---|
| Employee | 12% of wages | EPF account |
| Employer | 8.33% of wages up to ₹15,000 (max ₹1,250) | Employees' Pension Scheme (EPS) |
| Employer | Balance of 12% (3.67% of wages, or more above the cap) | EPF account |
| Employer | 0.5% of wages up to ₹15,000 | Employees' Deposit Linked Insurance (EDLI) |
| Employer | 0.5% of wages (minimum applies) | EPF administration charges |
EDLI and administration charges are paid by the employer on top of the 12% and do not reach your account. Establishments with fewer than 20 employees and certain categories can use a 10% rate instead of 12%.
Examples
| Basic + DA | PF basis | Employee EPF | Employer EPS | Employer EPF | Total into EPF |
|---|---|---|---|---|---|
| ₹12,000 | Actual | ₹1,440 | ₹1,000 | ₹440 | ₹1,880 |
| ₹15,000 | Actual | ₹1,800 | ₹1,250 | ₹550 | ₹2,350 |
| ₹30,000 | Actual | ₹3,600 | ₹1,250 | ₹2,350 | ₹5,950 |
| ₹30,000 | ₹15,000 ceiling | ₹1,800 | ₹1,250 | ₹550 | ₹2,350 |
| ₹60,000 | Actual | ₹7,200 | ₹1,250 | ₹5,950 | ₹13,150 |
The fourth row is common for salaries above ₹15,000: the employer limits both contributions to the statutory ceiling. Take-home pay is higher, but retirement savings are much lower.
How interest is calculated
EPFO declares an interest rate for each financial year. The rate was 8.25% for FY 2024-25 and again for FY 2025-26.
Interest is worked out on the monthly running balance at one-twelfth of the annual rate and credited once, after the year closes. A contribution for April earns interest for the full year; one for March earns interest for one month.
Example for one year: basic of ₹30,000, full PF, opening balance zero. ₹5,950 is added each month. The running balances from ₹5,950 to ₹71,400 earn about ₹3,190 of interest in total, so the year closes at about ₹74,590.
The long-term picture
Compounding does the heavy lifting over a career. Three illustrations at 8.25%, starting from a zero balance, over 30 years:
| Starting basic | Salary growth | PF basis | Contributions | Interest | Corpus |
|---|---|---|---|---|---|
| ₹15,000 | None | Ceiling | ₹8.5 lakh | ₹26.5 lakh | ₹34.9 lakh |
| ₹25,000 | None | Actual | ₹17.1 lakh | ₹53.5 lakh | ₹70.6 lakh |
| ₹25,000 | 6% a year | Actual | ₹52.4 lakh | ₹97.5 lakh | ₹1.50 crore |
In each case interest earned is larger than all the money deposited. These are estimates: future rates, job changes and withdrawals will change the result.
EPS: the pension part
The 8.33% that goes to EPS does not earn interest in your name. Instead, it buys a monthly pension from age 58 if you complete at least 10 years of eligible service. The pension is based on pensionable salary (capped at ₹15,000 for most members) and pensionable service. If you leave with less than 10 years of service, you can withdraw a lump sum from EPS based on a table, or carry the service forward.
Voluntary Provident Fund
You can ask your employer to deduct more than 12% as VPF, up to 100% of basic plus DA. It earns the same interest as EPF. The employer does not have to match it. VPF is attractive for employees in the old regime who want tax-efficient debt savings, but note the tax limit below.
Tax treatment
| Stage | Treatment |
|---|---|
| Employee contribution | Deduction under 80C in the old regime, within the ₹1.5 lakh limit |
| Employer contribution | Not taxed as long as employer PF, NPS and superannuation together stay within ₹7.5 lakh a year |
| Interest | Tax-free, except interest on employee contributions above ₹2.5 lakh a year (₹5 lakh if the employer does not contribute) |
| Withdrawal after 5 years' continuous service | Tax-free |
| Withdrawal before 5 years | Taxable, TDS may apply if above the threshold |
Continuous service includes service with previous employers if you transferred your PF rather than withdrawing it. Always transfer PF when you change jobs: it keeps the five-year clock running and avoids tax.
When you can withdraw
Full withdrawal is allowed at retirement or after a period of unemployment. Partial withdrawals are allowed for specific needs such as medical treatment, education, marriage, buying or building a house and repaying a home loan, each with its own conditions. EPFO has simplified many of these rules and processes most claims online through the member portal once your UAN is linked with Aadhaar and bank details.
Mistakes employers make
- Calculating PF on basic only when DA or other wage components should be included
- Ignoring the 50% wage rule after the labour codes
- Paying EPS on wages above ₹15,000 without a valid joint option
- Missing the monthly due date for deposit and ECR filing, which attracts interest and damages
- Not updating exits, which blocks employees' claims
Checking your PF passbook
Log in to the EPFO member portal with your UAN to see monthly credits from both you and your employer. Compare them with your salary slip: the employee share should match the PF deduction, and the employer EPF share should be 12% of wages minus the EPS amount. If months are missing, ask HR for the challan details. Delayed deposits cost you interest, and repeated gaps are a warning sign worth raising early.
For payroll teams
PF depends on correct wages, joining and exit dates and each employee's contribution basis. MizUp BMS runs payroll from salary structures, attendance and leave, and keeps payslips and payroll history in one place. To see how PF affects monthly pay, try the in-hand salary calculator, and read CTC vs in-hand salary for the full salary picture.
Frequently asked questions
What percentage is PF deducted from salary?
12% of basic pay plus dearness allowance. The employer contributes another 12%.
How much of the employer share goes to pension?
8.33% of wages up to ₹15,000, which is a maximum of ₹1,250 a month. The rest of the employer's 12% goes to your EPF account.
How is EPF interest calculated?
Interest is calculated monthly on the running balance at one-twelfth of the annual rate and credited to the account once a year.
What is the EPF interest rate for FY 2025-26?
8.25%, notified by EPFO, the same as FY 2024-25.
Can I increase my PF contribution?
Yes, through Voluntary Provident Fund (VPF), up to 100% of basic plus DA. The employer is not required to match it.
Is EPF withdrawal taxable?
Withdrawal after 5 years of continuous service is tax-free. Earlier withdrawal can be taxable and may attract TDS.
