Employee Provident Fund Contribution 2025
Employees will have to pay 12% of the basic monthly wages towards EPF. Employers will also have to make ETF contributions.
This will depend on the number of employees. Employers will have to pay 12% of basic, daily allowance and other allowances.
Overview of EPF Contribution in India
EPF (Employees’ Provident Fund) is a savings scheme where both the employee and employer contribute 12% of the employee’s monthly salary (basic + dearness allowance). This helps employees build a retirement fund over time. However, for those with lower salaries, this monthly deduction can feel like a burden and reduce their take-home pay, sometimes even leading to financial stress or debt.
Breakdown of EPF Contribution
Out of the employer’s 12% contribution, the amount is split into different components:
Category | Employer’s Contribution (%) |
Employees’ Provident Fund (EPF) | 3.67% |
Employees’ Pension Scheme (EPS) | 8.33% |
Employee Deposit Linked Insurance (EDLI) | 0.50% |
EPF Admin Charges | 1.10% |
EDLI Admin Charges | 0.01% |
The employee’s full 12% share goes directly into their EPF account. The employer’s 12% share is divided across the above components, including pension and insurance.
Who Needs to Contribute?
Any company with 20 or more employees must contribute to EPF. For some special cases, such as companies with fewer than 20 employees or industries like jute, beedi, bricks, coir, and guar gum, the contribution rate may be reduced to 10%.
What Is EPS and EDLI?
- EPS (Employees’ Pension Scheme): 8.33% of the employer’s contribution goes to the pension fund, up to a salary limit of ₹15,000/month.
- EDLI (Employees’ Deposit Linked Insurance Scheme): Employers pay 0.5% of the salary (up to ₹15,000) for life insurance cover. Employees don’t contribute to this
FAQs on EPF Contribution
- What is the current EPF contribution rate?
The current EPF contribution rate stands at 10%. However, both employee and employer may contribute at the standard rate of 12% if they want to.
- What is the maximum limit of EPF deduction?
The maximum limit when it comes to EPF deduction is Rs.15,000.
- How is EPF interest calculated?
Interest on the Employees' Provident Fund (EPF) is calculated on the contributions made by the employee as well as the employer.
- Can employees contribute more to EPF?
Yes, as an employee you can contribute up to 100 percent of the basic pay.
- Who all are eligible for the reduced rate of contributions offered by EPFO?
It is applicable to all class of establishments covered under the EPF & MP Act, 1952 except the establishments like central and state public sector enterprises or any other establishments owned or controlled of the central/state govt.
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