EPF
Full form: Employees Provident Fund
RetirementEPF is a mandatory retirement savings scheme for salaried employees earning below Rs 15,000/month basic (voluntary for higher earners). Both employee and employer contribute 12% of basic salary. Current interest rate: 8.25% per annum.
In detail
Employee's 12% goes entirely to EPF. Employer's 12% split: 3.67% to EPF, 8.33% to EPS (Employees Pension Scheme). EEE status: contribution deductible under 80C, interest tax-free, maturity tax-free (if employed 5+ years). Withdrawal before 5 years: taxable.
Formula
Monthly employee contribution = 12% of basic salarynMonthly employer contribution to EPF = 3.67% of basic salarynTotal EPF accumulation = (Employee 12% + Employer 3.67%) x monthly basic x months, compounded annually at 8.25%
Real-life example
🇮🇳 India example
Priya: basic salary Rs 30,000/month. Employee EPF: Rs 3,600/month. Employer EPF: Rs 1,101/month. Total EPF per month: Rs 4,701. Annual: Rs 56,412. At 8.25% for 30 years: approximately Rs 80.7L EPF corpus.
Frequently asked questions
Can I withdraw EPF before retirement? ▼
Partial withdrawal allowed for: medical emergency, home purchase, marriage, education. Full withdrawal on resignation after 2 months of unemployment. Premature full withdrawal before 5 years of service: taxable + TDS.