A Comprehensive Guide to EPF Contribution: Everything You Need to Know

byDilip PrasadLast Updated: June 12, 2023
A Comprehensive Guide to EPF Contribution: Everything You Need to Know

If you’re a working individual in India, chances are you’ve heard of the EPF (Employee Provident Fund) scheme. For those who haven’t, it’s a government-mandated savings scheme that ensures you have a financial safety net when you retire. But understanding how EPF works can be confusing and downright boring. That’s why we’ve put together this comprehensive guide to EPF contribution, to help you navigate the complex world of employee provident funds, and maybe even add a little humor along the way.

What is EPF?

EPF is a savings scheme for employees that is managed by the Employees’ Provident Fund Organisation (EPFO) of India. Under the EPF scheme, you are required to contribute 12% of your basic salary (plus dearness allowance and retaining allowance, if any) towards your EPF account. Your employer is also required to contribute an equal amount toward your EPF account. Over time, this money accumulates and earns interest until you reach retirement age, at which point you can withdraw the money as a lump sum or as a pension.

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How EPF Contribution is Calculated?

Calculating your EPF contribution can be a bit confusing, especially if you’re not a math whiz. But don’t worry – it’s not as complicated as it seems. Let’s break it down step by step.

First, you need to know your basic salary. Your basic salary is the fixed amount of money that you are paid each month, excluding any bonuses, incentives, or allowances.

Next, you need to calculate your DA (Dearness Allowance). DA is a cost of living adjustment that is paid to employees in order to offset the impact of inflation on their salaries. To calculate your DA, you need to know the percentage of DA that is applicable to your job. This percentage is set by the government and is updated periodically. Once you know the percentage of DA that is applicable to your job, you can calculate your DA by multiplying your basic salary by the percentage of DA.

Finally, you need to calculate your EPF contribution by adding your basic salary and your DA, and multiplying the total by 12%. This is the amount that will be deducted from your salary each month and contributed to your EPF account.

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Eligibility for EPF Contribution

Not everyone is eligible for EPF contribution. In order to be eligible, you must meet the following criteria:

  • You must be a salaried employee
  • You must work for an employer who is registered with the EPFO
  • Your employer must have at least 20 employees

Benefits of EPF Contribution

EPF contribution provides a number of benefits to employees, including:

  1. Tax Benefits: EPF contribution is tax-free, which means that the money you contribute towards your EPF account is exempt from income tax. This helps you save more money in the long run.
  2. Long-Term Investment: EPF contribution is a long-term investment that helps you build a retirement corpus over time. The interest earned on your EPF account is compounded annually, which means that your savings will grow over time.
  3. Withdrawal Options: Want to withdraw your EPF? EPF contribution offers a number of withdrawal options, including retirement, emergencies, and job change. You can also transfer your EPF account from one employer to another, which means that you can continue to build your savings even if you change jobs.

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EPF Contribution Rules

EPF contribution is mandatory for all employees who earn a basic salary of up to Rs. 15,000 per month. Employees who earn a higher salary can also contribute to the EPF scheme voluntarily. EPF contribution is deducted from the employee’s salary each month, and the employer is required to deposit it into the EPF account by the 15th of the following month.


EPF contribution is a vital savings scheme that every employee in India should be aware of. By contributing to your EPF account each month, you’re building a financial safety net for your future. The EPF contribution rate is currently fixed at 12%, but there have been talks of increasing it to 14%. Regardless of the EPF contribution rate, it’s important to contribute to your EPF account regularly to ensure that you have a comfortable retirement.


What is the salary limit for EPF?

Salaried individuals are eligible for EPF. It is compulsory for all employees earning less than ₹15,000 to register for the EPF. However, employees earning more than ₹15,000 can also voluntarily stay in the EPF scheme.

Is EPF compulsory for private companies?

Employees’ Provident Fund scheme is mandatory for all organizations in India with minimum workforce strength of 20 employees.

Can we have a salary without PF?

If you draw a salary and earn less than INR 15,000 (basic + dearness allowance), it is compulsory for you to register for EPF.

What is the minimum employee for PF?

It’s mandatory for a registered company with more than 20 employees to register with Employees’ Provident Fund Organisation. Companies with less than 20 employees can also register voluntarily.

Is PF optional for a salary above 15000?

Yes, individuals drawing a salary of more than 15,000 can choose not to contribute to EPF.

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