How to calculate your employers EPF contribution

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3 mins
05-May-2025

The Employee Provident Fund (EPF) helps employees build wealth throughout their working life at a government or private organization. The accumulated amount earns interest, which can be used for post-retirement or other financial goals. Both you and your employer contribute to the fund, and you can claim the total balance when you retire or two months after changing jobs.

You and your employer need to contribute 10% or 12% of your basic salary to the EPF.
However, if you are a woman, you only need to contribute 8% of your basic salary for the first three years.
During this period, your employer’s EPF contribution remains at 12%.
For smaller establishments or sick units with fewer than 20 employees, the contribution rate is 10%, according to the Employees' Provident Fund Organisation (EPFO) guidelines.

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EPF contribution

EPF contribution is divided into two parts.

Contribution by you

  • Male employees must contribute 10% or 12% of their basic salary.
  • Female employees must contribute 8% of their basic salary for the first three years. Thereafter it becomes, 10% or 12% of the basic salary.

Contribution by your employer

  • Your employer must contribute an amount equal to 10% or 12% of your basic salary towards EPF.
  • For female employees, the government contribution doesn’t change.

Contributed by

Monthly Percentage Contributed

Employer

12%

Employee

12% or 10%

Total

24%


This basic rate of EPF is further sub-divided.

  • Employee’s Provident Fund (EPF): 3.67%
  • Employee’s Pension Scheme (EPS): 8.33%
  • Employee’s Deposit Link Insurance Scheme (EDLIS): 0.50%
  • EPF Administration charges: 1.10%
  • EDLIS Administration charges: 0.01%

Additional read: PF Account Number

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How to calculate EPF contribution

Let’s understand with an example-

Assumptions:

  • Employee's basic salary + dearness allowance = Rs 14,000
  • Applicable interest rate = 8.25% per annum

Calculations:

Employee Contribution:

  • 12% of Rs 14,000 = Rs 1,680

Employer Contribution:

  • EPF: 3.67% of Rs 14,000 = Rs 514
  • EPS: 8.33% of Rs 14,000 = Rs 1,166

Total Contribution:

  • Employee + Employer = Rs 1,680 + Rs 514 + Rs 1,166 = Rs 2,360

Monthly Interest:

  • 8.25% per annum / 12 months = 0.6875% per month

This means the employee's EPF account will receive a monthly interest of 0.6875% on the total contribution of Rs 2,360.

To check whether your employer is making contributions towards your EPF account or to see your account balance, you can use your UAN and log into your EPF account on the EPFO member portal.

Information Needed to determine the EPF Interest Rate

The information below is needed to determine EPF interest:

  • The current age of an employee.
  • Current EPF balance.
  • Monthly basic and dearness allowance of up to a maximum of Rs. 15,000.
  • Percentage of contribution to EPF.
  • Retirement age.

Each month, the EPF contribution is credited to the EPF account, and interest is calculated monthly. Nonetheless, at the conclusion of the fiscal year, the entire amount of interest earned will be credited. 8.25% is the interest rate for FY 2024-2025. Because of this, the interest rate for each month's interest computation will be 0.679%, or 8.25%/12.

Additional read: Check Online PF Status

Benefits of EPF Contribution

Here are some benefits of EPF contributions:

1. Retirement Corpus

EPF serves as a retirement savings fund, ensuring financial security after employment.

2. Tax Benefits

Employee contributions to EPF are eligible for tax deductions under Section 80C of the Income Tax Act.

3. Financial Security

EPF acts as a safety net, offering financial stability during unforeseen circumstances.

4. Loan Facility

Members can avail loans against their EPF balance for specific purposes like home purchase or education.

5. Nomination Facility

EPF allows members to nominate beneficiaries, ensuring a smooth transfer of benefits in case of the member's demise.

6. Withdrawal Options

Members can make partial withdrawals for specific needs like education, medical emergencies, or home purchase.

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Frequently asked questions

Can I rely solely on EPF for my retirement savings?

While EPF provides a disciplined approach to long-term savings, it may not be enough to cover all your post-retirement financial needs. Diversifying your investments with a high-interest Fixed Deposit (FD) can help you build an additional financial cushion. Bajaj Finance FD offers returns up to 7.95% p.a., ensuring steady growth for your savings. Click here to book an FD today. 

How do I start investing in an FD to complement my EPF?

You can start investing in a Bajaj Finance Fixed Deposit online in just a few steps. With a minimum deposit of Rs. 15,000 and interest rates up to 7.95% p.a., you can diversify your savings and enhance your retirement planning. Check details now. 

How much percentage is EPF deduction from salary?

The total EPF deduction from your salary is 12%.

This 12% is divided as follows:

  • Employee Contribution: 12% of your basic salary + dearness allowance is deducted from your salary.
  • Employer Contribution: 8.33% goes towards the Employees' Pension Scheme (EPS) and 3.67% goes towards the Employees' Provident Fund (EPF).

All these contributions are reflected in your EPF member passbook.

Is EPF interest credited monthly or yearly?

EPF interest is computed monthly but it is credited annually.

Is the EPF interest rate fixed or variable?

The EPF interest rate can vary and is subject to periodic revisions by the government.

What is the method of crediting EPF interest to the subscribers?

EPF interest is credited to the subscribers' accounts by the Employees' Provident Fund Organization (EPFO).

Till what time will I get EPF interest in my account?

EPF interest is credited until the time you withdraw the EPF balance or close the account.

Will I face a loss when there is a delay in the updation of EPF interest in my passbook?

Delay in the updation of EPF interest in your passbook does not result in any financial loss.

Will I face a loss if I withdraw the EPF balance when there is a delay in the updation of EPF interest in my passbook?

Delay in the updation of EPF interest in your passbook does not impact the amount you receive upon withdrawing your EPF balance.

Is employer contribution to PF 12% or 13%?

The Employees' Provident Fund (EPF) is a widely chosen savings scheme in India, where both the employer and employee contribute 12% of the employee’s basic salary to secure future financial stability.

Is PF mandatory for 10 employees?

Generally, PF is mandatory for all establishments with 20 or more employees.

Can employer PF be less than 12%?

For most companies, the employer's PF contribution is mandated to be 12%.

How is PF Calculated in Tax?

Provident Fund (PF) is calculated as a percentage of an employee's basic salary and dearness allowance. Typically, both the employee and employer contribute 12% each to the PF. For tax purposes, employee contributions up to Rs. 1.5 lakh are eligible for deduction under Section 80C of the Income Tax Act. The interest earned and maturity amount are tax-free if certain conditions are met.

How can I check my employer contribution in EPF?

You can check your employer's contribution to your EPF by logging into the EPFO portal using your Universal Account Number (UAN). After logging in, navigate to the 'Passbook' section, where you can view your contribution details, including the employer's share.

How much PF contribution is tax-free?

The employee's contribution to EPF is eligible for tax deduction under Section 80C of the Income Tax Act, up to Rs. 1,50,000 annually.

Why is employer PF deducted from salary?

Employer PF is deducted from salary as part of a statutory contribution toward the Employee Provident Fund (EPF). This deduction helps build a retirement corpus for employees, ensuring financial security post-retirement. Employers also contribute to this fund on behalf of their employees.

What are the contributions payable by the employer and employee?

Under the Employees' Provident Fund (EPF) scheme in India, both the employer and employee contribute 12% of the employee's basic salary and dearness allowance. The employer’s contribution is further divided between the EPF and the Employee Pension Scheme (EPS), with 8.33% going towards EPS and the remaining to EPF.

What is PF in salary?

The Provident Fund (PF) is a retirement savings scheme where a portion of your salary is contributed every month. Both the employee and employer contribute to the fund, which accumulates interest and is designed to provide financial security post-retirement. If you work for a company with more than 20 employees, PF contributions are mandatory.

Is PF 1800 or 12 percent?

Under the Employees' Provident Fund (EPF) scheme, both the employee and employer contribute 12% of the employee's basic salary and dearness allowance. However, the employer’s contribution is capped at Rs. 1,800 per month, regardless of the salary amount.    

Can we show employer PF contribution in salary slip?

Employer contributions to the Provident Fund (PF) are not considered part of your taxable salary under Section 17(1) of the Income Tax Act, and thus may not be displayed as part of your gross salary. However, any employer contribution to the National Pension System (NPS) is part of the taxable salary.

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