How Much PF Is Deducted From the Salary: EPF Percentage & Calculation Explained

Key Insights

1. If you are an employee, the standard PF (provident fund) deduction is 12%.
    
2. The employer also contributes 12% in PF. Of this, 8.33% goes to the EPS and 3.67% to the EPF.
    
3. The maximum amount an employee can contribute in the PF is ₹1,800 per month if their salary is ₹15,000.

Do you know how much pf is deducted from salary per month?

An Employee Provident Fund is a retirement savings plan that helps you build enough funds for your retirement. Both you and your employer contribute to this fund, with a portion of your salary set aside each month in a PF account. 

Over time, this amount grows and becomes available to you after you retire. Companies with 20 or more employees are required to enrol in the Employee Provident Fund and how much pf is deducted from salary in Accenture. Keep reading to learn how much PF is deducted from your salary and how much pf is deducted from salary calculator . 

How much pf is deducted from salary in India?

In India, most employees have 12% of their basic salary and dearness allowance (DA) deducted each month for the Provident Fund (PF). Employers also contribute 12%, with some of their share going to the pension scheme (EPS). A few companies may use a 10% rate instead, and some may have a maximum limit of pf contribution by employee.

Important points about PF deduction:
 

• Employees contribute 12% from their salary, and employers add another 12% to the PF account. The employer’s share is usually split between EPF and EPS.
• The PF amount is calculated based on your basic salary plus dearness allowance, if you receive it. It does not include your total gross salary.
• This usually applies to employees whose basic salary is up to ₹15,000 per month. If your basic salary is higher, you can choose to contribute based on the higher amount or limit it to 12% of ₹15,000 (which is ₹1,800).
• Out of your employer’s contribution, 3.67% usually goes to the EPF, and 8.33% goes to the Employee Pension Scheme (EPS).
• You can claim a tax deduction for your 12% PF contribution under Section 80C.

The required 12% deduction helps build your retirement savings and also provides important tax benefits, and now you know how much pf is deducted from salary.

How is interest calculated in EPF?

For Provident Fund calculation, an employee puts 12% of their monthly basic pay and dearness allowance into the EPF, which is a retirement benefits program. The employer also contributes, with 8.33% going to EPS and 3.67% to EPF. 

Employees can withdraw the accumulated amount at retirement or, in some cases, while still working for specific reasons.

Each year, the government sets the interest rate for EPF contributions. Here are the steps to calculate interest on your EPF balance.

EPF interest is calculated every month, but it is added to your account at the end of the financial year. 

The following example explains how interest on an employee's EPF is calculated:

We will look at how Priya, who works in marketing, manages her PF contributions.

Monthly Snapshot:
 

• Basic + DA: ₹15,000
• Priya’s Contribution (12%): ₹1,800
• Employer’s Contribution (12%): ₹1,800
  • To EPS (8.33%): ₹1,250
  • To Priya’s EPF (Remaining 3.67%): ₹550
• Total Monthly EPF Credit: ₹1,800 (Priya) + ₹550 (Employer) = ₹2,350

Each month, Priya’s ₹2,350 contribution earns interest at the annual rate set for that year, such as 8.10%. Over time, this helps her savings grow for retirement . This information help you to understand the pf deduction from salary calculation.

What tax benefits do you get from making payments to EPF?

According to Section 80C of the Indian Income Tax Act, 1961, employees can get tax benefits for contributing to their PF accounts. You can claim this benefit for contributions up to ₹1,50,000.

If you contribute to the Provident Fund for at least five years, your contributions are not taxed. But if you withdraw your PF before completing five years, tax will be deducted at the source (TDS). Knowing your PF deductions can help you plan your finances and get the most tax benefits.

What are the objectives of EPFO?

Here are the main objectives of EPFO:
 

• Guarantees each employee has a single EPF account.
• Easy facilitation of compliance is necessary.
• Ensure that businesses consistently abide by the rules and guidelines established by the EPFO.
• To improve their systems and make sure their online services are reliable.
• To provide easy online access to all member accounts.
• To reduce claim settlement times from 20 days to just 3 days.
• To encourage and promote voluntary compliance.

The main goal of EPFO is to improve social security for India’s organised workforce by making it more modern, efficient, and secure of pf contribution by employee and employer

What are the benefits of having an EPF account?

Here are some advantages of the EPF program:

• It helps you save and plan for the long term.
• It is not necessary to invest all of your money at once. The employee's income is deducted on a monthly basis, which results in considerable savings over the long term.
• In a crisis, an employee might gain financially.

In this way, EPF offers employees a strong mix of required savings, steady growth through compounding, and financial security for the future.

What is EPF eligibility?

Here are the requirements to join the EPF program:
 

• Salaried employees must open an EPF account if their monthly take-home pay is less than Rs. 15,000.
• If a company has more than 20 employees, it must register for the EPF program by law.
• Companies with fewer than 20 employees can also choose to join the EPF program voluntarily.
• Additionally, employees who make more than Rs. 15,000 per month can open an EPF account with permission from the Assistant PF Commissioner.

The EPF is required for almost everyone working in India’s formal sector, helping most salaried employees save for retirement.

How can you check your PF balance?

You can check your PF balance by following these steps:
 

• Step 1: Visit the EPF portal and click on the “e-Passbook” option on the homepage.
• Step 2: Enter your UAN, password, and the captcha, then click “Sign In”.
• Step 3: Click on “Passbook” to continue.
• Step 4: Select your Member ID. Your PF balance and details like the PF percentage in your salary will appear on the screen.

The digital portal lets you quickly and clearly see your full PF balance and transaction history.

Conclusion

The Employee Provident Fund plays a key role in India's social security system. It combines mandatory savings, employer contributions, and tax benefits to help employees build retirement savings. This setup encourages people to save regularly, grow their money, and secure their financial future if they work in organised sectors.

FAQS

Should I keep my PF to a bare minimum? 

If you keep your Provident Fund (PF) contribution at a minimum 12% of your basic salary, you can boost your monthly take-home pay and have more freedom to invest in other options that might offer higher returns. Still, PF gives you a safe, tax-friendly 8.25% interest rate. Reducing your PF contribution only makes sense if you are committed to investing the extra money elsewhere to secure your retirement in the long run.

Can someone help me understand the structure of the EPF passbook?

An EPF passbook is an online record that shows your Employee Provident Fund transactions. It lists your monthly contributions from both you and your employer, the interest you earn, and any withdrawals. You’ll also see your UAN, member and establishment IDs, opening and closing balances for each year, and pension contributions.

How much percent as PF of an employee’s salary is deducted in a reputed company? 

In most well-known companies in India, 12% of your basic salary and dearness allowance (DA) is taken out as your contribution to the Provident Fund (PF). Your employer adds another 12%, so together, the total monthly contribution is 24%.

What is the PF, and when is it deducted from the salary? 

The Provident Fund (PF) is a retirement savings plan required by the government in India. Each month, both the employee and employer put in 12% of the employee’s basic salary and dearness allowance. This amount is taken from the salary before it is paid, helping employees save for the long term while earning interest and saving on taxes.

Is PF included in an employee’s take-home salary?

Unlike the CTC (Cost to Company), the take-home salary is the amount employees actually get in their bank accounts after deductions like PT, PF, TDS, and others.