What is EPF in salary? How much Provident Fund is deducted from salary?

New Delhi: The Employees’ Provident Fund Organization (EPFO) operates the EPF scheme to facilitate retirement savings. Organisations with more than 20 employees have to mandatorily sign up for EPF scheme. Under this scheme, both employees and employers contribute a portion of the employee’s basic salary towards the EPF. Currently, EPFO is offering an interest rate of 8.25 per cent per annum on the contributions. Here are the key details:

EPF Contribution Rates

First, let’s see who needs to contribute how much in EPF account of employee:

Male employees contribute 10 per cent or 12 per cent of their basic salary.
Female employees contribute 8% of their basic salary for the first three years of employment. Afterward, the rate becomes 10% or 12% depending on the employer’s policy.
Employers contribute an amount equal to 10 per cent or 12 per cent of the employee’s basic salary towards EPF.
For establishments with fewer than 20 employees or in sick units, the contribution rate is fixed at 10% as per EPFO guidelines.

How to check EPF balance

Detailed Breakdown of EPF Contributions

The contributions made towards EPF account are divided into various parts given below

Employee’s Provident Fund (EPF): 3.67% of basic salary
Employee’s Pension Scheme (EPS): 8.33% of basic salary (capped at a maximum threshold)
Employee’s Deposit Linked Insurance Scheme (EDLIS): 0.50% of basic salary
EPF Administration charges: 1.10% of basic salary
EDLIS Administration charges: 0.01% of basic salary

Monthly contributions are calculated based on the employee’s basic salary. For instance, if the basic salary is Rs 25,000, the EPF contribution by the employee would be 12% of Rs 25,000 (Rs 3,000), and the employer’s contribution would be 3.67% of Rs 25,000 (Rs 917.50 for EPF plus Rs 2,082.50 for EPS, subject to maximum limits).

EPFO interest rate

Interest Calculation

Interest on EPF contributions is credited monthly and compounded annually. The current interest rate for FY 2024-2025 is 8.25% per annum, which translates to 0.679% per month (8.25% / 12).

 EPFO: Currently, EPFO is offering an interest rate of 8.25 per cent per annum on the contributions. Female employees contribute 8% of their basic salary for the first three years of employment. Afterward, the rate increases.  Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today