How EPF Contributions Work
The Employee Provident Fund (EPF) is a retirement benefit scheme backed by the Government of India. It is mandatory for salaried employees in organizations with 20 or more staff. The beauty of EPF lies in its incredible compounding power and EEE (Exempt-Exempt-Exempt) tax status.
Your Contribution (12%)
Every month, 12% of your Basic Salary + Dearness Allowance (DA) is deducted and sent straight to your EPF account.
Employer Match (3.67%)
Your employer matches your 12%, but it's split. Only 3.67% goes to the EPF corpus. The remaining 8.33% goes to the Employee Pension Scheme (EPS).
Compound Interest
The government declares an interest rate every year (historically 8%+). This interest is compounded annually on your total accumulated balance.