What is EPF? (Employee Provident Fund)
The Employee Provident Fund is a mandatory retirement savings scheme for salaried employees in India, governed by the EPFO (Employees' Provident Fund Organisation). Both the employee and employer contribute 12% of the basic salary + Dearness Allowance each month to the EPF account.
EPF currently earns interest at 8.15% per annum, credited annually. The accumulated corpus is received as a lump sum at retirement or upon meeting specific withdrawal conditions.
EPF Contribution Breakdown
Employee Contribution = 12% of Basic + DA
Employer Contribution = 12% of Basic + DA
→ 8.33% goes to EPS (Pension Scheme)
→ 3.67% goes to EPF account
Interest Rate: 8.15% p.a. (FY 2023-24)
Key Features of EPF
- Tax Benefits: Contributions up to ₹1.5 lakh qualify under Section 80C. Interest and maturity are tax-free if service is 5+ years.
- Partial Withdrawal: Allowed for medical emergencies, home purchase, education, and marriage.
- Voluntary PF (VPF): Employees can contribute more than 12% voluntarily at the same interest rate.
- Nomination: Members can nominate family members to receive the corpus.
EPF vs NPS vs PPF
- EPF is mandatory for employees in organisations with 20+ workers; NPS and PPF are voluntary.
- EPF interest is fixed and declared annually; NPS returns are market-linked.
- All three fall under the EEE tax category for eligible contributions.
