The Employees' Provident Fund (EPF) is India's main statutory retirement savings scheme, into which both the employee and the employer contribute every month. It is managed by the Employees' Provident Fund Organisation (EPFO) and applies to most establishments with 20 or more employees. The fund builds a retirement corpus that earns interest each year, and it is a core part of compliant payroll for any company employing people in India.
How do EPF contributions work?
Both sides contribute a percentage of the employee's basic salary plus dearness allowance. The employee's share goes entirely to provident fund, while the employer's share is split between provident fund and pension.
- Employee contribution: 12% of basic salary plus dearness allowance, deducted from wages each month.
- Employer contribution: another 12%, of which 8.33% goes to the Employees' Pension Scheme (EPS) and the remaining 3.67% to provident fund.
- Pension wage ceiling: the pension portion is calculated on a wage ceiling of 15,000 rupees (about 180 US dollars) per month, so the EPS share is capped at about 1,250 rupees (about 15 US dollars).
- Interest: the balance earns interest at a rate reviewed and declared by the government each year.
| Contribution | Rate | Goes to |
|---|---|---|
| Employee | 12% | Provident fund |
| Employer (EPS) | 8.33% | Pension scheme |
| Employer (EPF) | 3.67% | Provident fund |
What is the UAN and why does it matter?
Every EPF member is assigned a Universal Account Number (UAN), a permanent identifier that stays with them across jobs. It links all of an employee's provident fund accounts under one number, so the balance moves with them when they change employers rather than starting fresh each time.
Who is covered by EPF?
Coverage depends on the size of the establishment and, in part, on the employee's wages. The main rules are straightforward.
- Establishment size: registration is mandatory for most establishments with 20 or more employees.
- Mandatory enrollment: employees earning basic wages up to the wage ceiling must be enrolled; higher earners can be enrolled by mutual agreement.
- Voluntary coverage: smaller establishments can opt in, and employees can contribute more through Voluntary Provident Fund.
What are the employer's EPF obligations?
For covered establishments, EPF is a recurring monthly duty, and late deposits attract interest and penalties. The core obligations are simple but time-bound.
- Register the establishment with EPFO and obtain a code.
- Enroll eligible employees, generate their UAN, and deduct the employee share each month.
- Deposit the combined contribution and file the monthly return by the 15th of the following month.
- Keep records and support employees with transfers and withdrawals when they join or leave.
This information is for general guidance. Confirm current rates and thresholds and consult experts for your specific situation.
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