Follow Us :

The EPF was established by the Employees Provident Fund Organization (EPFO) of India, a statutory body of the Government. It states that every organization having 20 or more permanent employees across different departments working, should compulsorily register with the EPFO. In the case of an organization which employs less than 20 employees or meet certain other conditions, as per the EPFO rules, the contribution rate for both employee and the employer is limited to 10 percent.

This fund is created through the contributions made by an employee and employer. Both the employee and the employer has to make certain contributions every month towards the EPF scheme and employee can get this money at the time of retirement or at the time of discontinuing working either temporarily or permanently. All salaried employees are eligible for the Employee’s Provident Fund (EPF). This is a retirement benefits scheme that saves a portion of the salary every month. It helps to have an aggregation of savings for emergencies.

The EPF is a tax-free investment instrument for the salaried employees having triple exempt Status. The contributions made by the employee is eligible for tax deductions under Section 80C, the interest earned on the total investments and the withdrawal is exempt from the purview of taxation.

The contribution paid by the employer is 12% of basic pay and an equal contribution is also payable by the employee. Out of the total deduction of 24% (employer+employee),15.67%( 12% Employee+3.67%Employer) goes to EPF and employer’s remaining 8.33 % goes to EPS (Employee Pension Scheme).

All these funds are pooled together and invested by a trust which usually generates an interest of 8% – 12%, which is decided by the government and the central board of trustees. The annual interest rate is available on the official EPF India website. That is why whenever you change job never forget to update your EPF information with your new company by providing them your EPF number so that they can continue the contribution.

So this was the introduction of EPF in nutshell. In the next series of EPF, we’ll be discussing other aspects of this such as Transfer, withdrawal, UAN no., Passbook updates etc.

Till then, Stay Positive, Stay Connected …:)

Join Taxguru’s Network for Latest updates on Income Tax, GST, Company Law, Corporate Laws and other related subjects.


  1. Manish says:

    Hello mam,
    Can employee contribute different amount of his share of pf during the year.?
    starting 4 months of a financial year = 1800 pm.
    after that 12% of salary.

    Please revert asap.
    Thank you

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Post by Date
April 2024