How contributions are split
The statutory wage ceiling for mandatory coverage was raised to ₹25,000 a month from 17 September 2026. Employers can contribute on higher wages voluntarily.
| Contribution | Rate | Goes to |
|---|---|---|
| Employee | 12% of basic + DA | EPF account |
| Employer — EPS | 8.33% of wages up to the ceiling | Pension scheme |
| Employer — EPF | Balance of 12% | EPF account |
| Employer — EDLI and admin | Small additional percentages | Insurance and administration |
Tax treatment
- Employee contribution qualifies for 80C (old regime)
- Interest on your own contributions above ₹2.5 lakh a year (₹5 lakh if no employer contribution) is taxable
- Employer contributions to PF, NPS and superannuation above ₹7.5 lakh a year are taxable as perquisites
- Withdrawal after 5 years of continuous service is tax-free
- Withdrawal before 5 years is taxable, with TDS if above ₹50,000
Worked example: monthly contribution on ₹40,000 basic
- 1Employee: 12% × ₹40,000 = ₹4,800 to EPF.
- 2Employer: 12% × ₹40,000 = ₹4,800 (if the employer contributes on full wages). Of this, 8.33% of the ₹25,000 wage ceiling (₹2,083) goes to EPS and ₹2,717 to EPF.
- 3Total into EPF account ≈ ₹7,517 a month.
≈ ₹90,200 a year into EPF before interest.
