EPF Rules — What You Must Know
| Parameter | Details |
|---|
| Employee Contribution | 12% of Basic Salary + DA |
| Employer Contribution (EPF) | 3.67% of Basic Salary + DA |
| Employer Contribution (EPS) | 8.33% of Basic Salary + DA (max ₹1,250/month) |
| Current EPF Interest Rate | 8.25% p.a. (FY 2025-26) |
| Interest Credited | Annually (calculated monthly) |
| Minimum Withdrawal Age | 58 years (full); partial allowed earlier |
EPF Withdrawal Rules
- Full withdrawal: On retirement at 58, or after 2 months of unemployment.
- Partial withdrawal: Allowed for medical emergencies, home purchase, education, or marriage (subject to tenure and amount limits).
- Tax on withdrawal: EPF withdrawal is tax-free after 5 years of continuous service. Withdrawals before 5 years attract TDS at 10% (if PAN is provided) or 30% (if no PAN).
- UAN: Universal Account Number links all your EPF accounts across employers. Activate it at the EPFO portal for easy tracking.
EPF Tax Benefits
- Employee contributions up to ₹1.5 lakh/year are eligible for deduction under Section 80C.
- Employer contributions are exempt from tax in your hands.
- Budget 2021 update: EPF interest on employee contributions exceeding ₹2.5 lakh/year is now taxable as per your income tax slab. For government employees the threshold is ₹5 lakh/year.
- Interest and maturity corpus remain tax-free if the 5-year continuous service condition is met.
📊 EPF vs NPS: EPF offers guaranteed 8.25% returns. NPS (equity option) can give 10–12% but with market risk. Use our NPS Calculator to compare your retirement corpus.
Frequently Asked Questions
How is EPF interest calculated?
EPF interest is calculated monthly on the opening balance but credited to the account annually. The formula: Monthly rate = 8.25% / 12 = 0.6875%. Interest is calculated on the closing balance of each month and credited once per year at year end.
Can I increase my EPF contribution voluntarily?
Yes. You can opt for Voluntary Provident Fund (VPF) and contribute up to 100% of your basic salary. VPF earns the same interest as EPF (8.25%) and is eligible for 80C deduction, but the employer is not required to match VPF contributions.
What happens to EPF when I change jobs?
With your UAN (Universal Account Number), you can transfer your EPF balance to the new employer online via the EPFO portal. Never withdraw EPF when switching jobs — it breaks the 5-year continuity for tax exemption and you lose compounding benefits.
What is EPS and how is my pension calculated?
EPS (Employee Pension Scheme) receives 8.33% of basic salary (capped at ₹1,250/month) from your employer. The monthly pension formula: (Pensionable Salary × Pensionable Service) / 70. Maximum pensionable salary is ₹15,000, so maximum EPS pension is around ₹7,500/month.
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CalcBharat.com Finance Team
Retirement & Investment Experts
EPF interest rate sourced from EPFO official notifications. Rate: 8.25% for FY 2025-26. Last updated: April 2026.