Where your EPF money comes from
Every month, 12% of your basic salary plus dearness allowance goes into your EPF account. Your employer contributes another 12%, but not all of it reaches EPF: 8.33% of wages, capped at ₹15,000 a month (so at most ₹1,250), goes to the Employees' Pension Scheme (EPS). Only the remainder is added to your EPF balance and earns interest.
Many online calculators ignore this split and overstate the corpus. This one handles it, and also lets you include yearly salary increases, since contributions grow as your pay does.
Worked example
Monthly interest = running balance × (annual rate ÷ 12)
Credited once a year, then compounds from the next yearThe current rate
EPFO declared 8.25% for 2025-26. The rate is decided once a year, so the calculator lets you change it and see a range.
Tax rules in brief
- Your own contribution counts toward the ₹1.5 lakh investment deduction under the old tax regime.
- Interest on your contributions above ₹2.5 lakh a year (₹5 lakh if the employer doesn't contribute) is taxable.
- Withdrawals after five years of continuous service are tax-free.
VPF: putting in more
You can raise your own contribution beyond 12% through the Voluntary Provident Fund. VPF earns the same EPF rate and is one of the safest ways to get a high fixed return, within the ₹2.5 lakh tax-free contribution limit.
See how EPF fits into the bigger picture with the retirement calculator.
Frequently asked questions
Why is my employer's EPF contribution less than 12%?
Because 8.33% of your wages (maximum ₹1,250 a month) goes to the Employees' Pension Scheme, which pays a pension later instead of building your EPF balance.
Can I withdraw EPF before retirement?
Partial withdrawals are allowed for specific needs such as buying a home, medical treatment, education or marriage, subject to service conditions.
What happens to EPF when I change jobs?
Your UAN stays the same. Transfer the balance to the new employer's account rather than withdrawing it, so the tax-free benefit and compounding continue.
Official references: EPFO