What is EPF?
The Employees' Provident Fund (EPF) is a retirement savings scheme run by the Employees' Provident Fund Organisation (EPFO). Every month, part of your salary and a matching contribution from your employer go into your EPF account, where they earn a government-declared interest rate. For most salaried Indians, EPF is the largest retirement saving they have.
How the monthly contribution is split
For a basic salary (plus DA) of ₹25,000 a month:
| Contribution | Rate | Amount | Goes to |
|---|---|---|---|
| Your share | 12% of ₹25,000 | ₹3,000 | EPF |
| Employer: pension | 8.33% of ₹15,000 | ₹1,249.50 | EPS (pension) |
| Employer: balance | 12% − EPS | ₹1,750.50 | EPF |
So ₹4,750.50 a month goes into your EPF account and ₹1,249.50 into the pension scheme.
How EPF interest is calculated
EPFO calculates interest on the balance at the end of every month, at 8.25% ÷ 12, and credits the total once a year. Contributions made later in the year therefore earn interest for fewer months. The calculator follows the same method and assumes your salary rises by the chosen percentage every year.
Worked example
A 30-year-old with a basic salary of ₹25,000 a month, a 5% yearly raise and 8.25% interest, working until 58:
- Your contributions: about ₹21.0 lakh
- Employer's EPF contributions: about ₹16.8 lakh
- Interest earned: about ₹68.9 lakh
- EPF balance at 58: about ₹1.07 crore
Interest makes up almost two-thirds of the final balance, which is why withdrawing EPF when changing jobs is so costly. Transfer it to your new employer instead.
Tips to grow your EPF
- Never withdraw on a job change. Transfer the account using your UAN.
- Consider VPF for extra safe, high-interest savings, within the tax-free interest limit.
- Check your passbook on the EPFO member portal to confirm your employer deposits every month.
- Plan the payout. At retirement, an SWP from a conservative fund can turn a lump sum into a monthly income; your gratuity adds to it.
See how PF affects your take-home pay with the salary calculator, and plan the rest of your retirement with the NPS calculator and PPF calculator.
Frequently asked questions
What is the current EPF interest rate?
EPFO declared an interest rate of 8.25% for FY 2025-26, the same as the previous two years. The rate is announced each year and credited to accounts after government approval.
How much is contributed to EPF every month?
You contribute 12% of basic salary plus dearness allowance. Your employer also contributes 12%, but 8.33% of wages up to ₹15,000 (at most ₹1,250 a month) goes to the Employees’ Pension Scheme (EPS); the rest goes to your EPF.
How is EPF interest calculated?
Interest is calculated every month on the running balance at one-twelfth of the annual rate, and the total is credited to your account at the end of the financial year. This calculator follows the same method.
Is EPF interest tax-free?
Interest is tax-free if your own contribution is up to ₹2.5 lakh a year (₹5 lakh if the employer does not contribute). Interest on contributions above that limit is taxable. Withdrawals after 5 years of continuous service are tax-free.
What is VPF?
Voluntary Provident Fund lets you contribute more than 12% of your basic pay to EPF. It earns the same interest rate, but your employer does not match the extra amount.
When can I withdraw my EPF?
The full balance can be withdrawn on retirement at 58, or after two months of unemployment. Partial withdrawals are allowed for things like a home purchase, medical treatment, education and marriage.
Sources
Last updated 19 September 2026. Results are estimates for planning only and are not investment, tax or legal advice. See our disclaimer.