The Employee Provident Fund (EPF) is India’s primary retirement savings scheme for salaried employees. It is managed by the Employees’ Provident Fund Organisation (EPFO). This guide covers everything from how EPF actually works and the current interest rate, to checking your balance, understanding your pension component, and what’s changed under the new EPF Scheme 2026.
What Is EPF and Who Is Covered?
EPF is a mandatory retirement benefits scheme for salaried employees. Every organisation with 20 or more employees must register under EPFO, and smaller organisations can register voluntarily. Employees, including contractual workers, earning up to ₹15,000 a month are automatically eligible. Both the employee and employer required to contribute. If you earn more than ₹15,000, you can still participate with your employer’s consent.
Once registered, you’re issued a Universal Account Number (UAN). This is a permanent 12-digit number that stays with you across every job change for the rest of your working life. Your actual PF account number, tied to a specific employer, changes each time you switch jobs. However, your UAN links all of them together, which is why activating and remembering your UAN matters.
What Just Changed: EPF Scheme 2026 and EPFO 3.0
This is a genuinely significant update. On June 29, 2026, the Ministry of Labour and Employment notified the new EPF Scheme 2026, published in the official gazette the following day. This replaces the EPF Scheme, 1952, which had governed EPF for over seven decades.
A few concrete changes worth knowing:
- Interest calculation changed: Interest is now calculated on a monthly running balance basis, rather than the older annual method, with the total rounded to the nearest rupee.
- EPFO 3.0 digital reforms: EPFO has been rolling out major digital upgrades, including UPI-based withdrawals and ATM-linked access to your PF savings, a significant convenience shift from the older, slower claim-and-transfer process.
- Faster settlement: EPFO has already scaled up auto-claim settlements substantially in recent years, moving toward faster, less manual processing for standard withdrawal claims.
If you’re researching EPF right now, treat any information about the withdrawal process or claim mechanics with the assumption that it may have improved recently. Check the EPFO portal or UMANG app directly for the current process.
What Is the Current EPF Interest Rate?
The EPF interest rate is 8.25% per annum, unchanged for three consecutive years now (FY 2023-24, 2024-25, and 2025-26). This rate is recommended by EPFO’s Central Board of Trustees and requires government ratification before being credited to member accounts. The rate for FY 2026-27 is typically decided toward the end of the financial year. So it’s important to check EPFO’s own announcements as that period approaches, since a rate this stable for three years doesn’t guarantee a fourth.
How Do EPF Contributions Work?
- Employee contribution: 12% of basic salary plus Dearness Allowance, or a flat ₹1,800, whichever is lower. Some organisations with fewer than 20 employees may contribute at a reduced 10% rate.
- Employer contribution: Matches the employee’s 12% contribution, though a portion of the employer’s share is typically diverted toward the pension scheme (EPS), covered below.
- Voluntary Provident Fund (VPF): You can contribute more than the mandatory 12% voluntarily. The employer isn’t required to match anything above the statutory contribution, but the same interest rate applies to your voluntary contributions.
How Do You Check Your EPF Balance?
You can check your EPF balance through several official channels:
- EPFO portal (Member e-Sewa): Log in with your UAN and password to view your full passbook, including monthly contributions and interest credits.
- UMANG app: A government app covering multiple services, including EPF balance checks and passbook access.
- Missed call service: Give a missed call to the registered EPFO number from your UAN-linked mobile number to receive your balance via SMS.
- SMS service: Send an SMS in the specified format to EPFO’s short code, also requires your mobile number to be linked to your UAN.
What Is the EPF Pension Scheme (EPS)?
A portion of your employer’s contribution, not yours, is directed into the Employees’ Pension Scheme rather than your regular EPF balance. This builds toward a monthly pension after retirement. However, you must meet the eligibility criteria, generally at least 10 years of contributory service. This is a separate component from your EPF balance and is calculated differently. Calculations depend on your pensionable salary and years of service, rather than accumulated contributions plus interest.
How Is EPF Taxed?
Tax Deduction on Employee Contributions
Your own EPF contributions qualify for a deduction under Section 80C, up to ₹1.5 lakh a year. This is combined with any other 80C investments you make.
Employer Contributions Above ₹7.5 Lakh
Since FY 2020-21, if your employer’s combined contribution to EPF, NPS, and any superannuation fund exceeds ₹7.5 lakh in a financial year, the excess becomes taxable in your hands.
Interest on Contributions Above ₹2.5 Lakh
Following a 2021 Budget amendment, interest earned on your own EPF contributions above ₹2.5 lakh in a financial year is taxable. Interest on employer contributions remains tax-free regardless of amount. This ₹2.5 lakh threshold also applies to VPF contributions, since they’re treated as part of your own contribution for this purpose. For government employees contributing to the General Provident Fund (GPF), the threshold is higher, at ₹5 lakh.
Worked example: If you earn a basic salary of ₹50,000 a month and contribute 12% to EPF, your annual contribution is ₹72,000. If you also voluntarily contribute an additional ₹3.28 lakh through VPF, your total contribution for the year reaches ₹4 lakh. Interest on the ₹1.5 lakh above the ₹2.5 lakh threshold becomes taxable.
To manage this, EPFO maintains two separate accounts for each subscriber from FY 2021-22 onward. One for taxable contributions and one for non-taxable ones, so only interest on the taxable portion is actually taxed.
TDS on EPF Interest
TDS applies to interest earned above the exemption threshold. It’s deducted at 10% if your EPF account is linked to a valid PAN, rising to 20% if it isn’t. For non-residents, TDS is deducted at 30% under Section 195.
Withdrawal Before 5 Years of Service
If you withdraw your EPF balance before completing 5 years of continuous service, the entire withdrawn amount, including employer contributions and interest, becomes taxable, and TDS is deducted accordingly.
Frequently Asked Questions
What is the current EPF interest rate?
8.25% per annum, unchanged for three consecutive financial years (2023-24, 2024-25, and 2025-26). The rate for the next financial year is typically announced toward the end of the current one.
What is EPFO 3.0 and the new EPF Scheme 2026?
The EPF Scheme 2026, notified in June 2026, replaced the EPF Scheme 1952 that had governed EPF for over 70 years. Alongside it, EPFO’s ongoing 3.0 digital reforms include UPI-based withdrawals and ATM-linked access to PF savings, aimed at making claims and withdrawals significantly faster and less manual.
How do I check my EPF balance?
Through the EPFO Member e-Sewa portal, the UMANG app, a missed call to EPFO’s registered number from your UAN-linked mobile, or an SMS to EPFO’s short code. All require your mobile number to be linked to your UAN.
What is a UAN, and how is it different from my PF account number?
Your Universal Account Number (UAN) is a permanent 12-digit identifier that stays with you across every job change. Your PF account number is specific to each employer and changes when you switch jobs; your UAN links all your PF account numbers together into one continuous record.
Is EPF interest taxable?
Interest on your own contributions is tax-free up to ₹2.5 lakh a year (₹5 lakh for government employees under GPF). Interest above that threshold is taxable. Interest on your employer’s contributions remains tax-free regardless of amount.
What is the EPF pension scheme (EPS)?
A portion of your employer’s contribution goes toward the Employees’ Pension Scheme, building toward a monthly pension after retirement if you meet the eligibility criteria, generally at least 10 years of contributory service. It’s calculated separately from your regular EPF balance.
Can I have two PF accounts with a single UAN?
This can happen if you don’t properly transfer your previous employer’s PF account when you switch jobs, resulting in an inactive old account and a new one under the same UAN. It’s worth merging these through EPFO’s online transfer claim process rather than leaving funds split across accounts, since only one should ideally remain active per UAN.
How much can I claim as a tax deduction for EPF contributions?
Up to ₹1.5 lakh a year under Section 80C, combined with any other 80C investments you make, such as PPF or ELSS.
Last Updated on 2 weeks ago by Team Paisaseekho
