Twelve percent from you, twelve from your employer, and a rate declared once a year. But not all of the employer's share reaches your provident fund, and that is the part most calculators leave out.
Rate 8.25%, FY 2025-26, the most recent declared rate. Checked 20 August 2026.
On ₹50,000 of basic pay rising 8% a year, your provident fund reaches ₹2,41,79,550 in 25 years. A further ₹3,74,850went to the Employees’ Pension Scheme instead and is not part of that balance.
A calculator that treats the whole 24% as going into the provident fund would show ₹1.05 Cr of contributions against the ₹1.02 Cr that actually gets there. The difference is the pension diversion, and it is why this page gives a smaller number than most.
Basic and dearness allowance, not your full salary
The default rate is 8.25%, FY 2025-26, the most recent declared rate, declared by the EPFO, following approval by the Ministry of Labour and Employment. EPF is declared once a year rather than quarterly, and the rate for the current year is normally announced towards its end, so this is the most recent confirmed figure rather than a promise about the year ahead.
| Year | Opening | Paid in | Interest | Closing |
|---|---|---|---|---|
| 1 | ₹0 | ₹1.29 L | ₹10,643 | ₹1.40 L |
| 5 | ₹7.15 L | ₹1.81 L | ₹73,895 | ₹9.70 L |
| 10 | ₹24.16 L | ₹2.73 L | ₹2.22 L | ₹29.11 L |
| 15 | ₹56.25 L | ₹4.08 L | ₹4.98 L | ₹65.31 L |
| 20 | ₹1.14 Cr | ₹6.06 L | ₹9.90 L | ₹1.30 Cr |
| 25 | ₹2.14 Cr | ₹8.98 L | ₹18.43 L | ₹2.42 Cr |
Both you and your employer contribute 12% of basic pay plus dearness allowance each month. Interest is credited once a year on the running balance, at the rate declared for that year.
The part that matters: 8.33% of wages, capped at a monthly wage ceiling of ₹15,000, is diverted from the employer’s share to the Employees’ Pension Scheme.Only the balance of the employer’s 12% reaches your provident fund and earns the EPF rate. This page shows the diverted amount as its own figure rather than absorbing it silently.
Because the diversion is capped at the ceiling rather than being a flat percentage of pay, it matters proportionally more at lower salaries. Above ₹15,000 of monthly basic the diverted amount stops growing and everything extra stays in the provident fund.
The rate is declared annually and is not fixed. 8.25% is the rate for FY 2025-26, the most recent declared rate. The figure for the current year is normally announced towards its end, so a twenty-five year projection at today’s rate is an illustration rather than a forecast.
It assumes an unbroken career at one contribution level with a steady annual increase. Job changes, gaps and periods of lower basic pay all change the outcome, and a transfer that is not completed properly can leave a balance sitting inactive.
It does not model the pension the diverted money buys, which is a separate and much smaller benefit than the amount diverted might suggest, nor the Employees’ Deposit Linked Insurance cover.
It also does not model withdrawals, which people commonly make on a job change and which reset the compounding that is the whole point of the fund.
On the default figures, ₹2.42 crore after twenty-five years: basic pay of ₹50,000 a month rising 8% a year, at the current 8.25%. Of that, ₹1.02 crore is contributions and ₹1.40 crore is interest.
In today’s money at 6% inflation, ₹2.42 crore has the purchasing power of about ₹56 lakh. That is a substantial part of a retirement and, for most people, not the whole of one.
No, and this is the most commonly misunderstood thing about EPF.Of the employer’s 12%, an amount equal to 8.33% of your wages up to a ceiling of ₹15,000 a month goes to the Employees’ Pension Scheme instead. On the ceiling that is ₹1,250 a month.
Only the remainder joins your provident fund and earns the EPF rate. Your own 12% is unaffected and goes entirely to the provident fund.
At higher salaries, less than you might expect, because the diversion is capped at the ₹15,000 wage ceiling rather than being a percentage of your actual pay. On the defaults here it comes to ₹3.75 lakh over twenty-five years. At a basic of ₹15,000 the same ₹3.75 lakh is a much larger share of a much smaller fund, which is why the correction matters most to the people with the least.
8.25% for FY 2025-26, the most recent declared rate, declared by the EPFO, following approval by the Ministry of Labour and Employment. It is set once a year rather than quarterly, and it has been remarkably stable in recent years while drifting down over the longer run: it was above 12% in the 1980s and has been in the 8% range for over a decade. It is not contractually fixed and the rate for a future year is not knowable.
Largely exempt, with one important exception. The contribution qualifies for deduction under Section 123 of the Income-tax Act 2025, formerly Section 80C, under the old regime. Interest is tax free, except that interest on your own contributions above ₹2.5 lakh in a financial year is taxable, a threshold that bites for higher earners and for anyone making large voluntary contributions. Withdrawal after five years of continuous service is tax free; before that it is not.
Transferring rather than withdrawing is almost always the better arithmetic, and withdrawing is what most people do. The balance you take out at thirty is the balance that would have compounded for another thirty years, and on the rates here money left alone roughly multiplies sevenfold over that period. Withdrawal before five years of continuous service is also taxable, so the immediate cost is real as well as the long one.
The Voluntary Provident Fund lets you contribute more than the statutory 12% of basic, up to 100%, earning the same EPF rate. There is no matching increase from the employer. For someone who wants a government-backed fixed return it is one of the better rates available and it is more flexible than PPF, which is capped at ₹1.5 lakh a year. Remember the ₹2.5 lakh interest threshold above, which is the point at which additional voluntary contributions start producing taxable interest.
For a long unbroken career at a decent basic, it can be a large share of the answer. Two things commonly undermine it: basic pay being set as a small fraction of total salary, so 12% of basic is a much smaller number than 12% of what you earn, and withdrawals at job changes. The retirement calculator sizes the target, and this figure can be entered there as money already invested.
8.25%, FY 2025-26, the most recent declared rate, declared by the EPFO, following approval by the Ministry of Labour and Employment. It is set annually rather than quarterly, and the rate for the current financial year is normally notified towards the end of it.
On basic pay plus dearness allowance, not on gross salary. Since many Indian employers set basic at a low fraction of the total package, the contribution is often much smaller than 12% of what you actually earn.
It caps the amount diverted to the Employees' Pension Scheme, at 8.33% of ₹15,000, which is ₹1,250 a month. It does not cap your provident fund contribution: above that wage, the whole of the employer's remaining share stays in the provident fund.
Interest on your own contributions above ₹2.5 lakh in a financial year is taxable. Below that it is exempt, and withdrawal after five years of continuous service is tax free.
Yes, through the Voluntary Provident Fund, up to 100% of basic plus dearness allowance, earning the same rate. The employer is not obliged to match it, and the ₹2.5 lakh taxable-interest threshold applies to your total own contributions.
Because it models the pension diversion. Most EPF calculators credit the full 24% to the provident fund, which overstates the balance. The diverted amount is shown here as its own figure so you can see exactly what the difference is.
Talk to the desk
Most retirement conversations start without it, and it is often the biggest single asset in the picture. Bring the balance from your passbook and we will work out what the rest of the plan actually needs to do.
