EPF Calculator

Understanding Employee Provident Fund (EPF)

EPF is a mandatory retirement savings scheme managed by the EPFO (Employees' Provident Fund Organization) for salaried employees in India. It is one of the most powerful wealth-building tools because of its high interest rate (currently 8.25%) and sovereign guarantee.

The 12% Contribution Rule

Every month, 12% of your Basic Salary + DA is deducted as your contribution. Your employer matches this with another 12%. However, the employer's share is split:

Tax Benefits (EEE Status)

EPF is highly tax-efficient, falling under the Exempt-Exempt-Exempt (EEE) category for most employees.

• Investment: Your contribution qualifies for Section 80C deduction (up to ₹1.5 Lakhs).
• Interest: Tax-free (if annual contribution is below ₹2.5 Lakhs).
• Maturity: Withdrawal after 5 years of continuous service is 100% Tax-Free.

Important Update (2021): If your own contribution exceeds ₹2.5 Lakhs in a financial year, the interest earned on the *excess* amount is taxable.

When Can You Withdraw EPF?

While the scheme aims for retirement at age 58, early withdrawals are allowed under specific conditions:

1. Job Loss (Unemployment)

If you are unemployed for 1 month, you can withdraw 75% of the corpus. After 2 months of unemployment, you can withdraw the remaining 25%.

2. Partial Withdrawals (Advances)

You can take a non-refundable advance for:
• Marriage/Education: After 7 years of service (up to 50% of share).
• Home Purchase: After 5 years of service.
• Medical Emergency: Anytime (no minimum service required).

VPF: Increasing Your Contribution

Did you know you can contribute more than 12%? This is called Voluntary Provident Fund (VPF).

VPF enjoys the same high interest rate (8.25%) and government safety. It is often considered better than PPF because there is no ₹1.5 Lakh investment limit in VPF (though the tax-free interest limit of ₹2.5 Lakhs applies).