Provident Fund (EPF) contribution

Employees' Provident Fund contributions look simple until you notice the employer's 12% is split, with part diverted to the pension scheme rather than your PF balance.

Provident Fund (EPF) contribution

Employee 12 % of (Basic+DA), Employer 12 % (8.33 % to EPS up to ₹15k cap, rest to EPF).

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How it is calculated

1

Employee contributes 12% of Basic + DA. All of it goes to the EPF account.

2

Employer also contributes 12%, but 8.33% is diverted to the Employees' Pension Scheme, capped at the wage ceiling.

3

The balance of the employer's contribution goes to EPF.

4

Where wages exceed the statutory ceiling, many employers restrict the EPS portion to the ceiling.

Worked example

On Basic + DA of ₹15,000, the employee contributes ₹1,800 and the employer ₹1,800 — of which ₹1,250 goes to EPS and ₹550 to EPF.

What to watch for

Frequently asked questions

Why is my employer's contribution not fully in my PF balance?

Because 8.33% of it is diverted to the pension scheme (EPS). Only the balance lands in your EPF account, which is why the two sides rarely match.

Can I contribute more than 12%?

Yes, through Voluntary Provident Fund. The employer is not obliged to match the extra.

Is EPF withdrawal taxable?

It is tax-free after five years of continuous service. Withdraw earlier and it becomes taxable, with TDS in some cases.

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