How EPF is calculated
You contribute 12% of your basic salary and dearness allowance every month. Your employer also pays 12%, but part of it, 8.33% of wages up to ₹15,000 (a maximum of ₹1,250), goes to the Employees’ Pension Scheme and not to your EPF. The rest goes into your EPF account. Interest is worked out on the monthly balance and credited once a year.
Worked example
Good to know
- Interest is tax-free up to the limit on yearly contributions. Interest on very large contributions may be taxable.
- Withdrawals before five years of service may attract TDS and tax.
- VPF lets you add more than 12% at the same interest rate.
Frequently asked questions
What is the current EPF interest rate?
The EPFO declares the rate every year. Enter the latest declared rate above. The default of 8.25% was the declared rate for FY 2024-25.
Does my employer’s full 12% go to EPF?
No. 8.33% of wages up to ₹15,000 goes to the pension scheme (EPS). The rest goes to your EPF account.
Is EPF interest taxable?
Interest is tax-free on your contributions up to ₹2.5 lakh a year (₹5 lakh if there is no employer contribution). Interest above that is taxable.
When can I withdraw my EPF?
On retirement at 58 or later, or when you are unemployed for a period. Partial withdrawals are allowed for certain needs such as a home, medical or marriage.
What is VPF?
Voluntary Provident Fund lets you contribute more than 12% of your basic. It earns the same interest rate as EPF.