How EPF Contributions Work
- You: 12% of Basic + DA goes to EPF. Voluntary PF (VPF) can add more.
- Employer: also 12%, but 8.33% (on wages up to ₹15,000, so up to ₹1,250 a month) usually goes to the Employees' Pension Scheme (EPS). Only the rest goes to your EPF balance. EPS builds a pension, not a lump sum, so it is not counted here.
- Interest: calculated monthly on the running balance and credited once a year.
- Tax: interest on your own contributions above ₹2.5 lakh a year (₹5 lakh if the employer does not contribute) is taxable. Withdrawals before 5 years of continuous service can also be taxable.
Compare with market-linked investing using the SIP Calculator.