What is the Employees' Provident Fund (EPF)?
The Employees' Provident Fund (EPF) is a mandatory retirement savings scheme managed by the EPFO for salaried employees in India. It builds a retirement corpus through regular monthly contributions from both the employee and the employer.
It offers a Sovereign Guarantee (backed by the Govt) and falls under the EEE (Exempt-Exempt-Exempt) tax status for most employees, making it one of the safest debt instruments.
Understanding the Contribution Split
Both you and your employer contribute 12% of your (Basic Salary + DA). However, the split is different:
- Employee Share: 100% of your 12% goes into your EPF account.
- Employer Share: Out of their 12%, only 3.67% goes to EPF. The remaining 8.33% goes to the Employee Pension Scheme (EPS).
EPF vs PPF: Which is Better?
| Feature | EPF (Employees' PF) | PPF (Public PF) |
|---|---|---|
| Interest Rate | 8.25% (Higher) | 7.1% |
| Eligibility | Salaried Employees only | Anyone |
| Lock-in | Until Retirement (58) | 15 Years |
| Employer Match | Yes (12%) | No |
Taxation on EPF (The 2.5 Lakh Rule)
New Tax Rule (Budget 2021): If your total contribution (Employee Share + VPF) exceeds ₹2.5 Lakhs in a financial year, the interest earned on the excess amount is taxable as per your income tax slab. The corpus accumulated up to ₹2.5 Lakhs remains tax-free.
How This Calculator Helps You
Corpus Projection
Estimate the lump sum you will receive at retirement (Age 58/60).
Interest Visualization
See how compounding turns small monthly deductions into a massive interest component over 20–30 years.
VPF Planning
Check how increasing your employee contribution (Voluntary PF) boosts your final corpus.
EPF Interest Calculation Formula
Interest is calculated monthly on the running balance, but credited annually.
*Interest is calculated every month and credited on March 31st.
Key Benefits of EPF
- Sovereign Guarantee: One of the safest debt instruments in India.
- Tax Benefits: Contributions qualify for Section 80C.
- Insurance (EDLI): Free life insurance cover up to ₹7 Lakhs.