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EPF Explained: Contributions, Interest and the New Withdrawal Rules
Quick Work Studio · 2026-10-27
If you work for a company with 20 or more employees, part of your salary goes into the Employees' Provident Fund (EPF) every month. It's one of the safest ways to build savings in India, and it pays more than most fixed deposits. Here's how it works, and what changed in 2026.
Where the money comes from
You put in 12% of your basic pay plus dearness allowance (DA). Your employer also puts in 12%, but splits it:
- 8.33% goes to the Employees' Pension Scheme (EPS), up to ₹1,250 a month (8.33% of the ₹15,000 wage ceiling).
- The rest goes into your EPF account.
| Basic + DA a month | You (12%) | Employer to EPF | Employer to EPS | Total to EPF |
|---|---|---|---|---|
| ₹15,000 | ₹1,800 | ₹550 | ₹1,250 | ₹2,350 |
| ₹25,000 | ₹3,000 | ₹1,750 | ₹1,250 | ₹4,750 |
| ₹50,000 | ₹6,000 | ₹4,750 | ₹1,250 | ₹10,750 |
Some employers calculate on the ₹15,000 ceiling only, rather than your full basic pay. Your payslip shows which.
The interest rate
EPFO declared 8.25% for 2025-26, the same as the year before. Interest is worked out on your balance each month and added to your account once a year, after the government approves the rate. With ₹4,750 going in every month, you'd have about ₹8.7 lakh after 10 years, of which about ₹5.7 lakh is what was paid in.
Checking your balance
- UMANG app or the EPFO member portal, with your UAN (Universal Account Number) and OTP.
- Missed call to 9966044425 from your registered mobile number, if your UAN is linked to your bank account, Aadhaar and PAN.
- SMS "EPFOHO UAN" to 7738299899.
Check that your employer's deposits appear every month. Missing months are worth raising with HR early.
The new withdrawal rules (EPF Scheme, 2026)
The EPF Scheme, 2026 replaced the old list of 13 withdrawal reasons with simpler rules:
- Three categories: essential needs (illness, education, marriage), housing, and special circumstances.
- Keep 25%: a quarter of your balance must stay in the account, so it keeps earning interest for retirement. You can withdraw from the remaining 75%.
- 12 months of service is enough to apply for a partial withdrawal.
Most claims are filed online on the EPFO portal or UMANG. The exact limits for each reason are on the EPFO website; check them before you apply, as the rules were changed recently.
When you change jobs
Don't withdraw your EPF when you switch jobs. Your UAN stays the same, so the new employer's deposits go to the same account, and you can transfer the old balance online. Withdrawing breaks the compounding and can create tax, as below.
Tax on EPF
- Your contributions count towards the ₹1.5 lakh deduction under the old regime.
- Interest is tax-free on contributions up to ₹2.5 lakh a year from you (₹5 lakh if your employer doesn't contribute). Interest on anything above that is taxable.
- Withdrawing before 5 years of continuous service can make the withdrawal taxable, unless it was due to reasons like ill health or the employer closing.
Try it: the EPF Calculator projects your EPF balance with salary increases, and the Salary Calculator shows how EPF affects your take-home pay. For safe savings outside work, see our PPF guide.