Employee Provident Fund
The Provident Fund (PF) is a retirement savings scheme run by the Employees’ Provident Fund Organisation (EPFO). Both you and your employee contribute a fixed share of the employee’s wages every month. You deposit the combined amount; the employee’s share is deducted from their salary. The money grows with interest and is paid out when the employee retires or meets the withdrawal conditions.
Applicability
Section titled “Applicability”PF is mandatory for every establishment that employs 20 or more people. You must register with the EPFO within one month of crossing that headcount. Once registered, you stay covered even if the headcount later falls below 20.
Establishments with fewer than 20 employees can register voluntarily. They then pay a reduced rate of 10% instead of 12%.
Employees earning up to ₹15,000 a month in wages are covered mandatorily. An employee joining for the first time with wages above ₹15,000 can opt out, or opt to contribute on the full amount. In practice, most employers cover all employees.
Universal Account Number (UAN)
Section titled “Universal Account Number (UAN)”Every member gets a 12-digit Universal Account Number (UAN). It stays the same across jobs, so a member’s PF history travels with them. When an employee changes jobs, the new employer links the new member ID to the same UAN.
The employee must activate the UAN and complete KYC (Aadhaar, PAN, bank account). Without it, the EPFO rejects withdrawal and transfer claims. The UAN can also be retrieved from the member portal.
Contribution split
Section titled “Contribution split”The employee pays 12% of wages (basic + dearness allowance). The full 12% goes to the employee’s PF account.
You also pay 12%, split between the pension fund and the PF account, plus two small charges:
| Component | Rate | Paid to |
|---|---|---|
| Employees’ Pension Scheme (EPS) | 8.33% | Pension fund |
| EPF (your share) | 3.67% | Employee’s PF account |
| Your PF total | 12.00% | — |
| EDLI (insurance) | 0.50% | Insurance scheme |
| Admin charges | 0.50% | EPFO |
The EPS share is capped: it is calculated on wages up to ₹15,000 a month. Above that, the excess that would have gone to EPS is redirected to the employee’s PF account. In total your PF outflow is roughly 13% of wages.
The wage ceiling has been ₹15,000 since 2014. The Supreme Court has directed the government to decide on raising it (to ₹21,000 or ₹25,000); until it is notified, ₹15,000 applies.
Worked example
Section titled “Worked example”Employee earning ₹15,000 a month (at the ceiling)
Section titled “Employee earning ₹15,000 a month (at the ceiling)”| Component | Rate | Amount |
|---|---|---|
| Employee PF | 12% | ₹1,800 |
| Your EPS | 8.33% of ₹15,000 | ₹1,250 |
| Your EPF | 3.67% of ₹15,000 | ₹550 |
| EDLI | 0.50% | ₹75 |
| Admin charges | 0.50% | ₹75 |
| Your total outflow | ₹1,950 |
Employee earning ₹25,000 a month (above the ceiling)
Section titled “Employee earning ₹25,000 a month (above the ceiling)”| Component | Rate | Amount |
|---|---|---|
| Employee PF | 12% of ₹25,000 | ₹3,000 |
| Your EPS | 8.33% of ₹15,000 (capped) | ₹1,250 |
| Your EPF | ₹3,000 − ₹1,250 | ₹1,750 |
| EDLI | 0.50% of ₹15,000 | ₹75 |
| Admin charges | 0.50% of ₹25,000 | ₹125 |
The employee’s PF account is credited with ₹4,750 a month (their ₹3,000 plus your ₹1,750), because the pension share is capped. Higher earners accumulate faster in PF for this reason.
Payment and return
Section titled “Payment and return”Deposit the contributions by the 15th of the following month through the monthly Electronic Challan cum Return (ECR) on the EPFO unified portal. Late payment attracts interest at 12% a year plus damages of 5% to 25% of the arrears, depending on the delay. Deducting an employee’s share and not depositing it is a criminal offence.
Interest and withdrawal
Section titled “Interest and withdrawal”The EPFO sets the interest rate each year; it was 8.25% for FY 2025-26. Employees can withdraw for specified purposes while in service and on retirement. Since 2022, tax rules limit the tax-free interest to contributions above ₹2.5 lakh a year, and employer contributions above 12% of wages are taxable.
Under the Labour Codes
Section titled “Under the Labour Codes”The Social Security Code now governs PF. Contributions are still based on the wage ceiling, but the new definition of wages is wider, so more of the salary may count toward the PF base (see Labour Codes overview). Review your salary structure so basic wages are at least 50% of total wages.