How EPF accumulation works
The Employees’ Provident Fund Act 1952 mandates contributions from both employer and employee. Each month:
- Employee deduction: 12% of basic+DA
- Employer EPF credit: 3.67% of basic+DA (the remaining 8.33% goes to EPS, capped at ₹1,250/month)
EPFO credits interest annually at the declared rate — 8.25% for FY 2024-25. The interest is calculated on the average monthly running balance (this calculator uses the standard mid-year approximation, consistent with the EPFO member portal projection tool).
Employer’s contribution split (EPF vs EPS)
The employer contributes 12% of basic+DA, but it is split:
| Portion | % | Goes to |
|---|---|---|
| EPF | 3.67% | Your EPF corpus (accumulates with interest) |
| EPS | 8.33% | Employees’ Pension Scheme (monthly pension at retirement) |
| EDLI | 0.5% | Employees’ Deposit-Linked Insurance |
The EPS cap means that if your basic+DA exceeds ₹15,000, the employer’s EPS contribution is still fixed at ₹1,250/month (8.33% × ₹15,000). The EPF portion (3.67%) is credited on the actual salary if the employer has opted for Higher Wage.
Tax treatment (EEE up to threshold)
EPF enjoys Exempt-Exempt-Exempt status:
- Contribution exempt — 12% employee contribution counted under §80C (up to ₹1.5L/FY limit)
- Interest exempt — tax-free on contributions up to ₹2.5L/FY
- Maturity exempt — full withdrawal is tax-free after 5 continuous years of service
Bridges
- PF Calculator — colloquial PF framing, same calculation
- VPF Calculator — voluntary extra contributions at the same 8.25% rate
- EPS Calculator — monthly pension from the employer’s 8.33% share
- §80C Calculator — your EPF contribution as a deduction input
- PPF Calculator — voluntary government savings alternative