PF / EPF (Provident Fund)

The Employee Provident Fund is a retirement savings scheme under the EPF & MP Act, 1952, mandatory for establishments with 20 or more employees (voluntary below that). Employees typically contribute 12% of Basic Salary (plus DA where applicable) each month, matched by an equal employer contribution.

The employee's full 12% lands in their EPF account, but the employer's 12% is often split between EPF and EPS (Employees' Pension Scheme) as prescribed by EPFO regulations. Contributions earn compound interest, declared annually by the government — 8.25% for three consecutive years through FY2025-26 — building a retirement corpus that can also be partially withdrawn for specific needs like home purchase or medical emergencies.

Mandatory contributions are calculated against a wage ceiling — raised from ₹15,000/month to ₹25,000/month effective 17 September 2026, the first change to this ceiling since 2014. Contributions on salary above the ceiling remain voluntary. Interest earned on employee PF and VPF contributions above ₹2.5 lakh per year is taxable.