EPFO - Employee Provident Fund Organization

The Employee Provident Fund Organization (EPFO) helps employees in India save for retirement. EPFO manages the Employee Provident Fund (EPF), where both employers and employees contribute money.

This government organization makes sure that workers have money when they retire. EPFO is a key part of India's social security system, helping workers have financial security in their retirement years.

The current interest rate for the year 2022- 2023 for EPF is set at 8.15%. The interest rate changes yearly as per government rules and regulations.

EPF Calculation

The Employee Provident Fund (EPF) is a retirement savings scheme in India. Both employees and employers contribute to the EPF, and the contributions are invested in various instruments. The accumulated corpus is then paid to the employee at the time of retirement.

The EPF is calculated taking into account both the employee's and employers contribution.

Points to note here:

  • An employee's contribution can be up to 12% of their basic and dearness allowance.
  • The employer will contribute 3.67% of your salary to the EPF
  • The interest will be calculated accordingly.

Hence, the formula to calculate EPF is:

EPF= Basic salary + dearness allowance x 12%

EPF Interest

EPF interest refers to the return earned on the accumulated balance in an Employee Provident Fund (EPF) account. This interest is credited annually to the EPF account and is determined by the EPFO (Employee Provident Fund Organization) based on the prevailing interest rates.

EPF interest rate is vital for account holders as it directly impacts the growth of their savings. This return is a key component that contributes to the overall corpus accumulated over time, making it an essential aspect for individuals to track and comprehend within the context of their long-term financial planning.

Interest Rate for EPF for year 2022-2023 8.15% p.a.
Note: The interest rate is subject to change as per government regulation.

EPF Eligibility

EPF eligibility defines the conditions that individuals must meet to enroll in the Employee Provident Fund (EPF) scheme. It is important for employees and employers to understand who qualifies for EPF membership, ensuring systematic retirement savings and benefits for eligible workers.

Here is the list of who is eligible for EPF:

  • Any person regardless of age employed in an establishment covered under the EPF Act, 1952.
  • Organisations with at least 20 employees (may vary depending on industry).
  • You can open a VPF or voluntary provident fund account even if your employer doesn't offer EPF.

Eligibility on Salary:

  • Monthly salary of Rs. 15,000 and above: Both employee and employer contribute a mandatory 12% of the basic salary.
  • Monthly salary Below Rs. 15,000: Both can contribute voluntarily (up to 12% of basic salary).

There are some exceptions for not creating an EPF account, which includes:

  • Employers with less than 20 employees are not obligated to offer EPF.
  • Certain industries such as agriculture, private domestic services, etc., are exempt.

EPF Benefits

EPF benefits include various advantages that can help an individual during emergencies or cash requirements. EPF has become a valuable tool for Indian employees for its long-term financial benefits.
Here's a breakdown of the key advantages:

  • Retirement Savings: EPF becomes a long-term savings scheme, helping you achieve a good financial state during retirement.
  • Regular contributions: Both employer and employee contribute a fixed percentage of salary, building a significant amount of funds over time.
  • Compounded interest: The accumulated amount earns attractive interest, amplifying your savings exponentially.
  • Age Proof: Financial Security: Members enjoy a sense of financial security through steady savings that accumulated over their working years.
  • Tax Benefits: EPF contributions qualify for tax deductions under Section 80C of the Income Tax Act.
  • Lump sum payout: Upon retirement, you receive a substantial amount, providing financial stability.
  • Pension: Depending on your contributions and service period, you may be eligible for a monthly pension after retirement.
  • Death benefits: Your family gets a lump sum and pension in case of your unfortunate demise while in service.
  • Partial withdrawals: You can withdraw funds for specific needs like medical emergencies, children's education, or house purchase.

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How is Interest on EPF Calculated?

The interest on the Employee Provident Fund (EPF) is calculated on a monthly basis based on the monthly running balance in the EPF account.

Here's a simplified explanation of how the interest on EPF is calculated:

  • Both employer and employee would be making a specific amount as monthly contributions. Based on the employee's basic salary and dearness allowance a fixed amount is contributed.
  • The interest rate for EPF is set by the government, the current rate for 2022-2023 is at 8.15%
  • Every month the contribution is added to the existing balance.

Calculation of the monthly Interest Rate on EPF:

Monthly interest=(EPF balance/12) * (Annual Interest Rate/100)

For Example:
If your EPF balance is Rs 20,000, with an annual interest rate of 8.15% p.a. the interest rate for the month will be as follows;

Monthly interest=(20000/12) * (8.15/100)

Monthly interest rate = 67.90

This Rs. 67.90 will then be added to your EPF balance for the next month, increasing the base for calculating interest in subsequent months.


  • Compounding: The calculated interest for each month is added to the EPF account, and this becomes the new base for the next month's interest calculation.
  • Yearly Compounding: While interest is calculated monthly, it is credited to the account annually. The interest is added to the account usually at the end of the financial year.

Schemes Offered Under EPFO

The Employees' Provident Fund Organization (EPFO) administers various schemes aimed at providing financial security and welfare benefits to employees in India.
Below listed are some key schemes offered under EPFO:

1. Employees' Provident Fund Scheme (EPF):

  • This is the primary scheme where both employees and employers contribute a fixed percentage (usually 12%) of the employee's basic salary (and dearness allowance) towards a retirement fund.
  • The employee and employer contributions earn interest at a rate set by the government each year.
  • The accumulated balance is tax-free at withdrawal upon retirement (or partially tax-free in other situations).

2. Employees' Pension Scheme (EPS):

  • This scheme provides a monthly pension to employees after retirement.
  • The employer contributes 8.33% of the employee's basic salary (and dearness allowance) towards the pension fund.
  • The pension amount is calculated based on the employee's salary and years of service.
  • This scheme is currently only available to employees covered under the EPF Act, 1952.

3. Employees' Deposit Linked Insurance Scheme (EDLI):

  • This scheme provides financial assistance to the families of employees who die while in service.
  • The employer contributes 0.85% of the employee's basic salary (and dearness allowance) towards the insurance fund.
  • In case of employee death, a lump sum amount is paid to the nominee or dependent family members.
  • This scheme also offers family pension benefits to the deceased employee's dependents.

How to Transfer EPF Money

Transferring your EPF money involves moving your accumulated balance from your old employer's account to your current employer's account.

Here's a step-by-step guide:

Step 1: Log in to the EPFO Member Seva portal: https://unifiedportal-epfo.epfindia.gov.in/ using your UAN and password.

Step 2: Go to "Online Services" and select "One Member - One EPF Account (Transfer Request)".

Step 3: Check your eligibility and review the details of your old and current employers.

Step 4: Fill out the online Form 13: This form requires details of both your old and current employers, your PF account numbers, and the reason for transfer.

Step 5: Sign the form digitally and submit it online. You can save a PDF copy for your records.

Step 6: Your current employer will verify the details and approve the transfer request.

Step 7: Once approved, the EPFO will transfer your funds within 20-30 working days.

EPF Withdrawal Rules

EPF withdrawal says how individuals can access their Provident Fund savings. This introduction provides a brief overview of the guidelines governing when and how employees can withdraw funds from their EPF accounts, crucial for those considering utilising their savings for purposes like retirement or emergencies.

There are certain conditions you need to fulfill before thinking about getting the full EPF benefits, which are:

  • Minimum service period:

You should have contributed to your EPF account for at least one year to be eligible for any withdrawal (except for retirement or death).

  • Documents required:

The documents needed will vary depending on the reason for withdrawal. For instance, medical withdrawals might require medical certificates, while education withdrawals might require school fee receipts.

  • Formalities

You'll need to submit a duly filled withdrawal form (usually Form 19) along with the required documents to your EPF office or online through the Member Seva portal.

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EPF Withdrawal Conditions

EPF withdrawal conditions define when and how individuals can access their funds. This section highlights the eligibility criteria for making withdrawals, covering scenarios like home purchase, medical emergencies, education, or unemployment periods.

Some conditions to fulfill before withdrawing EPF:

  • Retirement: At the age of 55, you can withdraw the entire amount tax-free.
  • Leaving service: You can withdraw up to 90% of your balance if unemployed for 1 year, or the full amount if unemployed for 2 months.
  • Medical emergencies: You can withdraw for your own or dependent's medical treatment.
  • Housing: You can withdraw for the down payment, construction, or EMI payment of a house.
  • Education: You can withdraw from your children's higher education.
  • Other: You can also withdraw for specific reasons like marriage, disability, etc.

What is the amount you can withdraw from your EPF?

EPF withdrawal amounts vary based on conditions set by the EPFO, such as medical emergencies or home purchases.

For instance, you can withdraw:

  • 100% On retirement or death.
  • 90%: For unemployment exceeding 1 year.
  • 75%: For unemployment exceeding 1 month.
  • Up to 3 times balance: For certain purposes like housing or education.
  • Up to 30%: For other purposes.
Note: Withdrawals take 30-45 days, varying based on case complexity. Partial withdrawals are allowed for housing, education, or medical emergencies, with limits (e.g., 3 times the balance for housing).

EPF Taxation

EPF taxation involves tax implications for contributions, interest, and withdrawals. Key points include tax-exempt status for employee contributions, taxable limits on employer contributions, and taxation upon withdrawal.

Employer's contribution:

  • Any EPF contribution made to the account from the employer is tax-exempt.
  • There is no TDS(Tax deducted at source) on the employer’s contribution, and the employee does not have to include it in their taxable income.

Employee's contribution:

  • An employee can contribute up to 12% of their salary amount and dearness allowance, which is tax-exempt.
  • The employee can claim a tax deduction on their contribution amount and will not be subjected to any TDS.

Interest earned on EPF:

  • The employee can be exempted from tax if the interest earned on the EPF is up to Rs 2.5 lakh per year.
  • However, any interest earned on an employee's EPF account that exceeds Rs 2.5 lakh per year is taxable in the hands of the employee.

You'll need to submit a duly filled withdrawal form (usually Form 19) along with the required documents to your EPF office or online through the Member Seva portal.

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Frequently Asked Questions

EPF stands for Employees' Provident Fund, a government-backed retirement saving scheme in India where employees and employers contribute towards a fund for the employee's future.

Yes, you can take a loan from your EPF account under certain conditions. The amount you can borrow depends on your EPF balance and you can use it for specific purposes like buying a house or paying for your children's education.

You can borrow up to 3 times your EPF balance if you have completed at least 5 years of service, or 30% of your EPF balance if you have not completed 5 years of service.

No, there is no age restriction for employees to join EPF. Any individual, regardless of age, can become a member as long as they are employed in an establishment covered under the EPF Act, 1952. A fresh graduate or a seasoned professional, you're eligible to join EPF and start saving for your retirement.

No, EPF contributions stop once you leave your job, but it keeps growing with time. You can still withdraw under certain conditions.

If denied PF membership, an employee should contact the Regional Provident Fund Commissioner at their local PF office.

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