Definition
EPF (Employer & Employee Split)
The Employees' Provident Fund is a retirement savings scheme where both you and your employer contribute a percentage of basic pay each month, building a corpus that earns interest.
EPF is a mandatory retirement savings scheme for eligible salaried employees. You contribute a fixed percentage of your basic (plus DA), and your employer contributes a matching amount. The combined money earns a government-declared interest rate annually.
Notably, a portion of the employer's contribution is diverted to the EPS (pension scheme), so the employer's full share does not all land in your EPF balance. Your contribution qualifies for deduction under Section 80C in the old regime, and the corpus is tax-free if withdrawn after the qualifying conditions are met.
The accumulated EPF is a key retirement asset, transferable across jobs via your UAN, and withdrawable on retirement or under specified circumstances.
Related terms
- GratuityGratuity is a lump-sum payment an employer gives an employee for long service, generally payable after completing five years, with tax exemption up to a prescribed limit.
- Basic PayBasic pay is the fixed core component of your salary on which many other components and statutory contributions — like HRA, PF and gratuity — are calculated.
- EPS ContributionThe Employees' Pension Scheme is funded by diverting part of the employer's EPF contribution; it provides a monthly pension after retirement based on service and pensionable salary.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.