EPF contribution breakup: where your 12% goes
See how your PF deduction and your employer's matching 12% are split between EPF and the EPS pension under the new ₹25,000 wage ceiling, with the monthly figures at four salary levels.
Quick answer
All of your own 12% goes into your EPF account. Your employer also pays 12%, but 8.33% of your wage goes to the EPS pension scheme, and only the rest reaches your EPF. The wage ceiling for this was raised from ₹15,000 to ₹25,000 a month from 17 September 2026, so EPS is now capped at ₹2,083 a month (it was ₹1,250). On a ₹50,000 basic, that means ₹9,917 a month into EPF: ₹6,000 from you and ₹3,917 from your employer. EPFO is still notifying the details, so check your payslip.
Your 12%: the employee share
Every month, 12% of your basic pay plus dearness allowance (DA) is taken from your salary. This is your EPF contribution. All of it goes into your EPF account. None of it goes to the pension scheme.
The 12% is worked out on basic + DA only. HRA, special allowance and bonus are not part of it under the usual rule. So two people with the same total pay can have very different PF deductions. It depends on how much of the pay is labelled "basic". The Labour Codes wage rule limits how low that share can go.
What the 12% looks like
The employee share grows in a straight line with your basic + DA:
- ₹15,000 basic: ₹1,800 a month from your salary.
- ₹50,000 basic: ₹6,000 a month.
- ₹1,00,000 basic: ₹12,000 a month.
Your share has no ₹2,083 cap. The cap only applies to the pension part of your employer's share, explained below.
Rules as of FY 2026-27. Rates and limits can change; check the EPFO website before you rely on them.
Your employer's 12%: EPS first, then EPF
Your employer also pays 12% of your basic + DA. This money is split in two. First, 8.33% of your wage goes to the Employees' Pension Scheme (EPS). For this, the wage is capped at ₹25,000 from 17 September 2026 (₹15,000 before), so the EPS part is at most ₹2,083 a month. Whatever is left of the employer's 12% goes into your EPF account.
This is why your passbook shows a smaller employer credit than your own. Up to a ₹25,000 basic, the employer's EPF share is just 3.67% of the wage: ₹550 at ₹15,000 and ₹917 at ₹25,000. Above ₹25,000, the EPS part stays at ₹2,083. So the employer's EPF share rises as a percentage of your pay.
| Basic + DA a month | You (12%) | Employer to EPS | Employer to EPF | Total into EPF a month |
|---|---|---|---|---|
| ₹15,000 | ₹1,800 | ₹1,250 | ₹550 (3.67%) | ₹2,350 |
| ₹25,000 | ₹3,000 | ₹2,083 | ₹917 (3.67%) | ₹3,917 |
| ₹50,000 | ₹6,000 | ₹2,083 | ₹3,917 (7.83%) | ₹9,917 |
| ₹1,00,000 | ₹12,000 | ₹2,083 | ₹9,917 (9.92%) | ₹21,917 |
How we worked this out: each row comes from the same tested module our EPF calculator uses. Employee share = 12% of basic + DA. EPS = 8.33% of the wage, with the wage capped at ₹25,000 (₹2,082.50, rounded to ₹2,083 as EPFO rounds to the rupee). Employer to EPF = 12% of basic + DA minus EPS. The percentage in brackets is the employer's EPF share as a part of basic + DA. The table uses the new ceiling; before 17 September 2026, EPS was at most ₹1,250 at every level from ₹15,000 up.
In a year, the EPS part adds up to ₹24,996 at a basic of ₹25,000 or more, and ₹15,000 at ₹15,000. That money builds your pension. It does not sit in your EPF balance, so it does not earn EPF interest. Over a year, ₹1,19,004 reaches EPF on a ₹50,000 basic, and ₹2,63,004 on a ₹1,00,000 basic.
The ₹25,000 wage ceiling and the ₹2,083 EPS cap
The wage ceiling for EPF was raised from ₹15,000 to ₹25,000 a month from 17 September 2026 (Cabinet decision, 16 September 2026). EPFO is issuing the detailed rules. The ceiling is the wage used for the pension part. It works like this:
- If your basic + DA is ₹25,000 or less, EPS gets 8.33% of your actual wage. On ₹20,000, that is ₹1,666.
- If it is more than ₹25,000, EPS gets 8.33% of ₹25,000. That is ₹2,082.50, which is shown as ₹2,083.
- Before 17 September 2026 the ceiling was ₹15,000, so EPS was at most ₹1,250 a month. Payslips from before the change will show that figure.
- Your own 12% is not capped by this rule. Nor is the total employer 12%. The cap only decides how much of the employer's money goes to the pension side.
Joined after 1 September 2014 on a higher wage?
If you joined EPF on or after 1 September 2014 with basic wages above the wage ceiling, you are not in the pension scheme (EPS); both your 12% and your employer's 12% go to your PF. EPFO's FAQ states this with the ₹15,000 ceiling. On a ₹50,000 basic, that means ₹12,000 a month into EPF and no EPS part. How the new ₹25,000 ceiling applies to existing members: check EPFO. Your passbook will show which applies to you. The table above assumes the usual EPS split; our calculator has a Yes / No option for the pension share.
How EPF interest is worked out
The EPF interest rate is set every year. For FY 2025-26 it is 8.25% a year. Interest is worked out every month on your running balance, at one-twelfth of the yearly rate. It is then added to your account once, at the end of the year.
- Each month, your 12% and the employer's EPF share are added to your balance.
- Interest for that month is the running balance times 8.25% ÷ 12.
- The 12 monthly interest figures are added up and credited at the end of the year. From then on, that interest earns interest too.
Worked example: ₹50,000 basic, first year
Say you start with a zero balance and a ₹50,000 basic. Each month, ₹9,917 goes into EPF. In month 1, interest is worked out on ₹9,917. In month 2, on ₹19,834. By month 12, it is on ₹1,19,004. Adding the 12 balances gives 9,917 times 78 (1 + 2 + … + 12). Interest = 9,917 × 78 × 8.25% ÷ 12.
- Into EPF each month
- ₹9,917
- Into EPF in the year
- ₹1,19,004
- Balance at year end
- ₹1,24,322
- Interest for the year
- ₹5,318
Exact interest is ₹5,317.99, so the estimated balance after one year is ₹1,24,321.99. On a ₹25,000 basic, the same method gives ₹2,100.49 of interest on ₹47,004 paid in. These figures assume the rate stays at 8.25% and your pay does not change during the year. Your EPFO passbook is the final word.
The Labour Codes 50% wage rule
The new Labour Codes came into force on 21 November 2025. They define "wages" more widely. If your allowances are more than 50% of your total pay, the excess is added back to wages. Basic pay and DA are the main parts of wages.
This matters for PF because your contribution is a percentage of wages. If your employer keeps basic low and allowances high, the rule could raise the wage that PF is worked out on. Here is an illustration, using the same tested module:
| Total pay ₹1,00,000 a month | Basic + DA only (₹30,000) | Wages under the 50% rule (₹50,000) |
|---|---|---|
| You (12%) | ₹3,600 | ₹6,000 |
| Employer to EPS | ₹2,083 | ₹2,083 |
| Employer to EPF | ₹1,517 | ₹3,917 |
| Total into EPF a month | ₹5,117 | ₹9,917 |
How we worked this out: allowances of ₹70,000 are 70% of the ₹1,00,000 total. The part above 50%, ₹20,000, is added to the ₹30,000 basic + DA, so wages become ₹50,000. Both columns use the same split as the table above. This is an illustration, not a forecast of your payslip.
In this example, ₹4,800 more could go into EPF each month. But your take-home pay could drop by ₹2,400, the extra 12% from your side. How your employer applies the rule depends on your pay structure, so check your payslip. The same wider wage can also raise gratuity; see the gratuity calculator. If you want a further retirement top-up outside EPF, the NPS calculator shows how regular contributions could grow.
FAQs
Why is my employer's EPF credit smaller than mine?
Both of you pay 12% of basic + DA. But part of your employer's 12% goes to the EPS pension first: 8.33% of the wage, up to ₹2,083 a month from 17 September 2026 (₹1,250 before). Only the rest is credited to your EPF. On a ₹50,000 basic, you put in ₹6,000 and your employer's EPF credit is ₹3,917.
Is the EPS amount always ₹2,083 a month?
Only if your basic + DA is ₹25,000 or more, under the ceiling in force from 17 September 2026. Below that, EPS gets 8.33% of your actual wage, which is less than ₹2,083. Before the change, the cap was ₹1,250. If you joined on or after 1 September 2014 with basic wages above the wage ceiling and are not in the pension scheme, there is no EPS part at all. EPFO is still notifying the details, so check your payslip.
Does the EPS money earn 8.25% interest?
No. The 8.25% rate for FY 2025-26 applies to your EPF balance. The EPS part goes to a separate pension scheme. It does not sit in your EPF balance and does not earn EPF interest.
When is EPF interest credited?
It is worked out every month on your running balance, at the yearly rate ÷ 12. The total for the year is credited once, at the end of the year. On a ₹50,000 basic starting from zero, first-year interest is about ₹5,318.
What is the employer's 3.67%?
It is what is left of the employer's 12% after 8.33% goes to EPS, when your wage is at or below the ceiling, now ₹25,000. At a ₹25,000 basic it is ₹917 a month. Above ₹25,000, EPS stays at ₹2,083, so the employer's EPF share is more than 3.67% of your pay.
Will the 50% wage rule cut my take-home pay?
It could, if your allowances are more than half of your pay and PF is worked out on the higher wage. More of your salary would go to EPF. In our illustration on ₹1,00,000 total pay, your own share rises from ₹3,600 to ₹6,000 a month.
Sources
- PIB: EPF interest rate of 8.25% for FY 2025-26
- PIB: EPF wage ceiling raised from ₹15,000 to ₹25,000 from 17 September 2026
- EPFO FAQ: no EPS for members who joined on or after 1 September 2014 above the wage ceiling
- PIB factsheet: the Labour Codes and the wider definition of wages
- EPFO: FAQs on contributions and pension scheme membership
For education only. This is not investment, tax or legal advice. Rules as of FY 2026-27; check your EPFO passbook and the official EPFO site. Interest rates are assumptions, not predictions.