Model EPF balance using FY-wise interest rates (8.25% for 2023-24), wage ceiling vs higher wages, VPF contributions, EPS split, and withdrawal TDS rules.
Monthly contribution snapshot
Employee EPF (12%)
₹1,800
Employer EPF
₹550
Employer EPS diversion
₹1,250
VPF (optional)
₹0
Total monthly EPF credit: ₹2,350. EPS diversion is not part of EPF balance.
Totals
| FY | Contrib | Withdrawals | Interest | Closing | Rate |
|---|---|---|---|---|---|
| 2020-21 | ₹28,200 | ₹0 | ₹1,099 | ₹29,299 | 8.5% |
| 2021-22 | ₹28,200 | ₹0 | ₹3,420 | ₹60,919 | 8.1% |
| 2022-23 | ₹28,200 | ₹0 | ₹6,018 | ₹95,137 | 8.15% |
| 2023-24 | ₹28,200 | ₹0 | ₹8,915 | ₹1,32,252 | 8.25% |
| 2024-25 | ₹28,200 | ₹0 | ₹11,977 | ₹1,72,429 | 8.25% |
| 2025-26 | ₹28,200 | ₹0 | ₹15,292 | ₹2,15,921 | 8.25% |
On a ₹15,000 wage (ceiling). Source: EPFO, Ministry of Labour.
| Contribution | Rate | Amount (₹15K wage) | Goes to |
|---|---|---|---|
| Employee | 12% | ₹1,800 | EPF Tier 1 |
| Employer → EPS | 8.33% | ₹1,250 (capped) | EPS (pension scheme) |
| Employer → EPF | 3.67% | ₹550 | EPF Tier 1 |
| Employer → EDLI | 0.5% | ₹75 (capped) | Life insurance |
| Employer → Admin | 0.5% | ₹75 | EPFO admin charges |
Key insight: The employer's 12% is not fully going to your EPF. Of that, ₹1,250/month (8.33% of ₹15,000) flows to EPS for your pension — not to your EPF balance. Only ₹550/month (3.67%) from the employer side grows in your EPF. The full 12% employee contribution grows in EPF.
| Financial Year | EPF Interest Rate | Note |
|---|---|---|
| FY 2023-24 | 8.25% | Highest in 3 years; notified Aug 2024 |
| FY 2022-23 | 8.15% | Slight recovery |
| FY 2021-22 | 8.10% | Four-decade low |
| FY 2020-21 | 8.50% | — |
| FY 2019-20 | 8.50% | — |
| FY 2018-19 | 8.65% | — |
| Scenario | TDS Rate | Taxability |
|---|---|---|
| 5+ continuous years of service | Nil | Tax-free |
| <5 years, withdrawal >₹50K, PAN linked | 10% | Taxable as salary income |
| <5 years, withdrawal >₹50K, no PAN | 20% | Taxable as salary income |
| Form 15G/H submitted (nil taxable income) | Nil | Still taxable if income exceeds basic exemption |
| Transfer to new employer (not withdrawal) | Nil | Continuity maintained; no tax |
The EPFO Central Board of Trustees recommended 8.25% for FY 2023-24, the highest rate in three years. This was notified by the Ministry of Labour in August 2024. For FY 2024-25, the rate has not yet been officially declared as of April 2026 — the EPFO typically announces it by March each year. The FY 2022-23 rate was 8.15%.
Employee contributes 12% of basic + DA (full amount goes to EPF Tier 1). Employer also contributes 12%, but this is split: 8.33% goes to EPS (Employee Pension Scheme, capped at ₹1,250/month based on ₹15,000 wage ceiling) and 3.67% goes to EPF. Additionally, employer pays 0.5% to EDLI (life insurance) and 0.5% to EPF admin charges.
EPF withdrawal before completing 5 continuous years of service is taxable. TDS is deducted at 10% if PAN is provided, 20% if PAN is not linked, on withdrawals above ₹50,000. Withdrawals after 5 continuous years are fully tax-free. For unemployment of 2+ months, 75% can be withdrawn tax-free. Form 15G (below 60 years) or Form 15H (60+) can be submitted if your total taxable income is nil — no TDS is deducted in that case.
The statutory EPF wage ceiling is ₹15,000 per month. Employees earning above ₹15,000 can still contribute on actual wages (called 'international workers' or higher wage option) with employer consent. Once you opt for higher wages, you cannot revert. EPFO contribution on higher wages means more EPF balance but also higher employer EPS contribution (capped at actual 8.33%, not the ₹15K ceiling).
Voluntary Provident Fund (VPF) is additional contribution by the employee above the statutory 12%. The employer's contribution does NOT increase with VPF. VPF earns the same EPF interest rate (8.25% for FY 2023-24). From FY 2021-22, interest on employee EPF + VPF contributions exceeding ₹2.5 lakh per year is taxable as per income tax slab.
Full EPF withdrawal is allowed: (1) retirement at age 55+, (2) 2 months of unemployment, (3) migration abroad permanently, (4) marriage of a female member, (5) disability preventing further employment. Partial withdrawal for specific purposes (housing, medical, education, marriage) is allowed after 7 years of membership.
EPF interest is calculated on the monthly running balance but credited annually. Formula: Monthly interest = (Opening balance + current month contributions) × annual rate ÷ 12. Interest accrues every month and is credited at financial year close. No interest on accounts inactive for 3+ years (unless pensioner maintaining account).
Employee Deposit Linked Insurance (EDLI) is a life insurance scheme under EPF. The employer pays 0.5% of basic wages (capped at ₹75/month) as EDLI premium. Nominees receive a death benefit of up to ₹7 lakh under EDLI if the member dies while in service. Employees do not pay separately for EDLI.
Educational estimate only. Validate with EPFO passbook, payroll records, and official EPFO notifications. Tax rules are as per FY 2025-26.