Quick summary: Employee PF contribution is 12% of Basic+DA. The employer also contributes 12%, split between EPF (3.67%) and EPS (8.33%). PF is mandatory for employees earning up to ₹15,000/month in Basic+DA, in organisations with 20+ employees.
What is PF (Provident Fund) in India?
The Employees' Provident Fund (EPF) is a government-mandated retirement savings scheme administered by the Employees' Provident Fund Organisation (EPFO). Under the EPF Act 1952, both employees and employers contribute a percentage of the employee's salary to a provident fund account every month.
On your salary slip, you will see this as a deduction labelled "PF", "EPF", or "Provident Fund" in the Deductions section.
PF contribution rates in 2026
Employee Contribution
12%
of Basic Salary + DA
Entirely goes to EPF account
Entirely goes to EPF account
Employer Contribution
12%
of Basic + DA, split:
3.67% → EPF | 8.33% → EPS
3.67% → EPF | 8.33% → EPS
Important: EPS (Employee Pension Scheme) contribution is capped at 8.33% of ₹15,000 = ₹1,250/month, regardless of actual salary. The remaining employer contribution above this cap goes entirely to EPF.
PF calculation example
Example: Employee with Basic ₹30,000/month
Basic Salary = ₹30,000/monthEmployee PF (12% × 30,000) = ₹3,600/month ← deducted from salary
Employer contribution breakdown:
EPS (8.33% × 15,000 capped) = ₹1,250/month
EPF (3.67% × 30,000) = ₹1,101/month
Total Employer PF = ₹2,351/month
Total PF credited to your account = ₹3,600 + ₹1,101 = ₹4,701/month
(EPS is pension fund, not in your PF balance)
(EPS is pension fund, not in your PF balance)
What is the difference between EPF and EPS?
| Feature | EPF (Provident Fund) | EPS (Pension Scheme) |
|---|---|---|
| Who contributes | Employee (12%) + Employer (3.67%) | Employer only (8.33%) |
| Purpose | Retirement savings / corpus | Monthly pension after age 58 |
| Withdrawal | On resignation / retirement | Pension after 10 yrs service |
| Contribution cap | No cap on employee side | Capped at 8.33% of ₹15,000 |
| Interest rate (2026) | 8.25% per annum | N/A (defined benefit) |
When is PF mandatory?
- The organisation has 20 or more employees (mandatory EPF registration)
- The employee earns ₹15,000/month or less in Basic + DA (mandatory enrolment)
- Employees earning above ₹15,000 can voluntarily opt in to EPF
Tip for high earners: If your Basic+DA exceeds ₹15,000/month, you can choose to limit your PF contribution to 12% of ₹15,000 = ₹1,800/month only, instead of 12% of your full Basic. This increases your take-home pay. Discuss this option with your HR.
PF on salary slip — what you should see
A compliant Indian salary slip should show PF in the Deductions section clearly. Here's what correct PF line items look like:
- Employee PF: ₹X (12% of Basic+DA) — deducted from your gross pay
- Some payslips also show Employer PF contribution as an informational line (not deducted from salary)
- Your UAN (Universal Account Number) should be visible on the payslip
Tax treatment of PF contributions
- Employee contribution: Deductible under Section 80C (up to ₹1.5 lakh/year combined with other 80C investments)
- Employer contribution: Not taxable in your hands up to 12% of Basic+DA
- Interest earned: Tax-free up to contributions of ₹2.5 lakh/year (₹5 lakh if no employer contribution). Above this limit, interest is taxable.
Generate a payslip with correct PF deductions
Our free tool calculates PF, ESI, Professional Tax, and TDS automatically.
Generate Free Payslip →Frequently asked questions about PF
What is the PF deduction rate in India?
The employee PF contribution is 12% of Basic+DA. The employer also contributes 12%, split as: 8.33% to EPS (capped at ₹1,250/month) and 3.67% to EPF.
Is PF deducted from gross salary or basic salary?
PF is calculated on Basic salary + DA only. HRA, LTA, conveyance, and other allowances are excluded from the PF calculation base.
Is PF mandatory for all employees in India?
PF is mandatory for employees earning up to ₹15,000/month in Basic+DA in organisations with 20 or more employees. Employees earning above this threshold can opt in voluntarily.
Can I withdraw my PF before retirement?
Yes. You can make partial withdrawals for specific purposes (home purchase, medical emergency, education, marriage) after certain years of service. Full withdrawal is allowed on retirement or if unemployed for more than 2 months.
What is UAN and where does it appear on my payslip?
UAN (Universal Account Number) is a 12-digit number assigned to every EPF member by EPFO. It stays the same across all employers throughout your career. A good payslip should display your UAN in the employee details or deductions section.