Employee Provident Fund (EPF) is a retirement benefit scheme that’s available to all salaried employees. This fund is maintained and overseen by the Employees Provident Fund Organisation of India (EPFO) and any company with over 20 employees is required by law to register with the EPFO.

Employee Provident Fund

All salaried employees are eligible for Employee’s Provident Fund (EPF). This is a retirement benefit scheme that saves a portion of the salary every month. It helps to have a corpus of savings for emergencies or retirement.

Tax Benefits

Provident Fund Deduction from Salary

When you start working, you and your employer both contribute 12% of your basic salary (plus dearness allowances, if any) into your EPF account .

The entire 12% of your contribution goes into your EPF account along with 3.67% (out of 12%) from your employer. While the balance 8.33% from your employer’s side is diverted to your EPS (Employee’s Pension Scheme) .

It’s important to note that if your basic pay is above Rs. 15,000 per month, your employer can only contribute 8.33% of 15,000 (i.e. Rs. 1250) to your EPS and the balance goes into your EPF account.

These funds are pooled together from many employees like yourself and invested by a trust. This 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.

EPF is active every time you receive your pay. If you’re changing jobs, it’s important to also update your EPF/UAN information with your new company, giving them your UAN number so that they can continue the contribution.

Interest on EPF

The compound interest that’s decided upon by the government and central board of trustees is paid on the amount standing to the credit of the employee as on the 1st of April every year.

While your contributions are made monthly, the interest is calculated yearly. At the start of every year, you have an opening balance (which is the amount accumulated till that point). Your opening balance for the next year would be: opening balance + total monthly contributions + interest on the (old opening balance + contribution) .

It’s important to note that interest will only accumulate on your EPF balance and not on the funds that your EPS balance, as EPS is a pension scheme.

Tax Benefits

The employer contribution to your EPF is tax-free, and your contribution is tax-deductible under Section 80C of the Income Tax Act. The money you invest in EPF, the interest earned and the money you eventually withdraw after the mandatory specified period (5 years) are exempt from Income Tax.

What if I don’t want to pay PF?

Well, chances are that you’ve already started your professional career. The only time you can opt out of the EPF program is at the start of your career, when you tell your first boss that you don’t want to be a part of it and fill out Form 11 . If you’ve contributed towards EPF even once and have an account created in your name, you cannot opt out of this scheme.

Don’t worry though, as even though opting out of the EPF scheme increases your in-hand salary, it’s the easiest way to build a retirement fund. Having a little less spending power now could mean financial stability later. With the pooling of funds from you and your employer and the relatively high interest rates, you could be on your way to building a strong corpus of funds, without even realising it.

EPF customer care

For those employees wishing make queries regarding their PF account, be a delay in a claim being raised, discrepancies with regard to their contributions, inability to make a withdrawal and so on, the EPFO has a dedicated customer care service. EPFO’s customer care toll free number is 1800 118 005, Regional Offices Number Click Here and Office Contact Details Click Here.

EPFO grievance

For employees who want to register a grievance, the EPFO has a dedicated part of their member portal for employees to fill in a grievance registration form and file a complaint. Employees usually face grievances with regard to withdrawals, PF settlements, transfer of accounts, settlement of pension and so on.

Read: How to register EPF Grievance online


The UAN is a 12-digit unique number that has been given to every PF member. Before the introduction of the UAN, employees were inconvenienced by the fact that they had to keep shifting their accounts when they shift organisations, but now, the UAN controls all PF accounts of an employee and it can be functioned as one account. 

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