Salary & Compensation•6 min read•Published: 2025-03-03
How EPF Affects Your Salary: Employee & Employer Contributions Explained
Under the Employees' Provident Funds Act, 12% of your Basic + DA is deducted as Employee PF and matched by the employer.
Key Financial Takeaways
- Employee contributes 12% of Basic directly to EPF account.
- Employer contributes 12%, which is split: 3.67% to EPF and 8.33% to Employee Pension Scheme (EPS).
- EPF delivers government-backed interest (currently ~8.25% p.a.) with sovereign security.
Interactive Calculator
Calculate Salary with EPF Deductions
Simulate your own numbers with instant mathematical accuracy on our free tool.
The 12% Split Explained
For an employee with ₹40,000 monthly Basic:
Employee PF deduction = ₹4,800/month (credited to EPF).
Employer contribution = ₹4,800/month (₹1,468 to EPF + ₹3,332 to EPS pool).
Frequently Asked Questions
Is EPF interest tax-free?
Interest on employee contribution up to ₹2.5 Lakh per year is completely tax-free. Interest on contributions above ₹2.5L is taxable.
Advertisement
Ad Space PlaceholderFormat: responsive
More in Salary & Compensation
Disclosure: Ankiva One provides free financial calculators and guides. When you apply for products through partner links on our website, we may receive compensation at no extra cost to you. This does not influence our objective calculations.