Provident Fund Contribution Breakup

Learn how your PF contributions are divided for smart planning.
PF Contribution Breakup
4 min

Provident Fund (PF) is an important savings and investment instrument in India. PF is a government-backed fund to which salaried employees and their employers can contribute. It helps build a savings corpus for the employee, which can be withdrawn through Form 19 in EPFO and utilised post-retirement or during certain emergencies. Your savings and PF contribution are secure as they gradually accumulate interest earnings and build wealth in the long run while providing tax benefits in the short run.

Like PF, Fixed Deposit offer another secure way to grow your savings. While PF is designed for long-term retirement planning, FDs can provide funds for shorter-term needs like a down payment, education expenses, or even a dream vacation.

Benefits of PF contribution

  • Savings for Retirement: The mandatory nature of PF contributions ensures that you regularly save towards your retirement, creating a substantial corpus over your working years.
  • Government-backed security: The PF scheme is regulated by the EPFO, providing a high level of security for your contributions.
  • Attractive interest rates: PF interest rates are determined by the government and are often higher than regular savings account rates, leading to faster growth of your funds.
  • Tax benefits: Your contributions towards PF are eligible for tax under Section 80C of the Income Tax Act.
  • Partial withdrawals: Under specific circumstances (e.g., medical emergencies, home purchase, higher education), you can make partial withdrawals from your PF account before maturity.
  • Pension benefits: A portion of your employer's contribution goes towards the Employees' Pension Scheme (EPS), providing a monthly pension after retirement, based on your salary and years of service.

For the financial year 2024-25, the EPF interest rate is set at 8.25% per annum.

Employee PF contribution

The rate of employee contribution to the PF is set at 12%, as we discussed earlier. It is, however, important to note that the employee PF contribution rate comes down to 10% in companies under special circumstances as mentioned below:

  • Companies that have less than 20 employees
  • Businesses that suffer an annual loss when compared to their net worth
  • Businesses that are categorised as sick companies under the Sick Industrial Companies Act by the Board for Industrial and Financial Reconstruction (BIFR)
  • Companies in sectors like beedi, jute, brick, guar gum, and coir.

Also read: PF transfer form

Employer contribution to PF

Employers match an employee’s contribution to their PF accounts, helping build a corpus and contributing to securing the employee’s post-retirement life. The minimum employer contribution to PF is fixed at 12% of Rs. 15,000. Although voluntarily, the employer can contribute a greater percentage as well. Thus, the minimum contribution that an employer must make to the EPF is Rs. 1,800 every month.

Breakdown of employer contribution to PF

While the employee contribution of 12% directly goes to the EPF account, the employer contribution to PF can be broken down as explained below:

  • EPF contribution: From the total 12% of employer contribution to PF, 3.67% goes to the EPF fund. The employer contributions are mandatory if the maximum ceiling for wages is Rs. 15,000. This ceiling does not apply to international workers. For the employer to make a higher contribution, a joint request from both the employee and employer has to be tendered.
  • EPS contribution: Employees do not have to contribute to the EPF funds. 8.33% of the employer contribution to PF goes to the Employee Pension Scheme (EPS) accounts. A basic wage ceiling of Rs. 15,000 is applicable here. This means that even if your basic income is more than Rs. 15,000, the EPS deduction would still be 8.33% of Rs. 15,000. The remainder is credited to the EPF fund.
  • EDLI contribution: EDLI is the Employees' Deposit Linked Insurance scheme. When you enrol in EPFO, you are automatically signed up for insurance coverage. The contribution to EDLI is over and above 12% of the EPF fund. Employers must contribute an extra 0.5% to the EDLI.

Furthermore, employers also absorb additional administration fees for EPF and EDLI. These are 1.1% and 0.01%, respectively. Thus, it brings the total employer contribution to the PF account to 13.61% of an employee’s basic income in the scheme.


Provident Fund (PF) in India is a vital option for financial security, allowing employees and employers to contribute 12% of the employee's basic income. Understanding Provident Fund (PF) contributions can be vital for financial and tax planning. While the entire 12% of employee contribution goes directly to their EPF account, the employer contribution to PF is distributed between EPF, EPS, and EDLI funds. This concerted effort not only builds a robust financial safety net but also ensures retirement security and peace of mind during emergencies.

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Frequently asked questions

Is employer contribution to PF 12% or 13 %?

Employer contribution to PF is 12%, the same as an employee. However, it is important to know that over and above the 12%, employers have to make contributions to EDLI (0.5%) and cover administrative costs for EPF and EDLI (1.1% and 0.01% respectively). This brings the total employer contribution to PF to 13.61%.

Is PF mandatory for a salary above 15000?

Yes. Opening a PF account is mandatory if you are earning a salary of Rs. 15,000 or more. However, salaried individuals at all income levels can opt-in for it voluntarily. Monthly contributions have to be made at 12% of the basic pay, which directly builds your EPF corpus.

What is PF 13% of basic?

While employees contribute 12% of their basic salary to the PF account, employers not only match this but also pay an additional 1.61% as a contribution to EDLI and administrative costs. Thus, employers contribute 13.61% of employees’ basic salary to their PF account.

What is the maximum PF contribution per month?

As an employee, you can contribute more than 12% of your income to the PF. This directly affects your take-home salary, so typically, most employees choose to pay only the minimum 12%. However, even if you increase your contribution, the employer is not obligated to follow suit and may choose to pay only 12%.

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As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.