How EPF Works — Complete Breakdown
| Contribution | Rate | Goes To | Purpose |
|---|---|---|---|
| Employee | 12% of Basic+DA | EPF | Retirement savings |
| Employer (split) | 3.67% of Basic+DA | EPF | Retirement savings |
| Employer (split) | 8.33% of Basic+DA | EPS | Pension scheme |
| Total to EPF | 15.67% of Basic+DA | EPF + EPS | Combined retirement |
Note: Employer's EPS contribution (8.33%) is limited to salary of ₹15,000 = max ₹1,250/month to EPS. Balance goes to EPF.
EPF Interest — How It's Calculated
EPF interest (currently 8.25%) is calculated monthly on closing balance and credited annually in March. This means:
- Balance on March 31 = highest monthly closing balance + all contributions through the year
- Interest for the year credited at once in April
- Mid-year withdrawals lose proportional interest
- Above ₹2.5L annual employee contribution — interest becomes taxable (for high earners)
EPF Withdrawal Rules — When Can You Access It?
| Situation | Withdrawal Allowed | Amount | Tax |
|---|---|---|---|
| Retirement (58 years) | Full withdrawal | 100% | Tax-free (if 5+ yrs service) |
| Unemployment 2+ months | Full withdrawal | 100% | Taxable if <5 yrs |
| House purchase | After 5 years | Up to 90% | Tax-free |
| Medical emergency | Anytime | Up to 6 months basic salary | Tax-free |
| Child's education/marriage | After 7 years | Up to 50% of share | Tax-free |
How to Check Your EPF Balance
- EPFO Portal (passbook.epfindia.gov.in) — Download passbook with full transaction history
- UMANG App — Mobile app, check balance + claim status
- SMS: Send EPFOHO UAN ENG to 7738299899 from registered mobile
- Missed Call: Give missed call to 011-22901406 from registered mobile
🏦 Calculate Your EPF Corpus
Use EPF Calculator →Q: What happens to EPF when I change jobs?
Your EPF follows your UAN (Universal Account Number). When you join a new employer, give them your UAN — the EPF balance transfers automatically. Do NOT withdraw EPF when switching jobs — you lose 8.25% interest and pay tax. Let it compound.
Q: Is EPF better than NPS for retirement?
Both have merits: EPF offers guaranteed 8.25% with no market risk; NPS offers potentially higher returns (10-12%) but with market exposure and mandatory annuity. Most experts recommend both — EPF for safety floor, NPS for growth component and extra ₹50K tax benefit.
⚠️ Disclaimer
For educational purposes only. Consult a certified financial advisor for personalised advice.