EPF Contribution Breakup With Example

Employee Provident Fund (EPF) Contribution Breakup

The breakup of EPF contribution is very simple to understand. However before moving on for calculating breakup of EPF, let us understand what EPF means and it’s purpose.

EPF is a long term investment option especially designed for salaried individual to help them after retirement. The fund collected in EPF is through salary of an employee and the contribution amount is 12% of the basic salary of an salaried person and another 12% contributed by the employer. And this total amount of 24% is contributed every month. The amount is deposited at the Employee Provident Fund Organization (EPFO). This creates a good corpus and aims to make an individual financially secure after the retirement.

Example of EPF Contribution

Now let’s check an example of EPF contribution:

Let us assume your basic pay is INR 20000. So here is the breakup of EPF contribution will look like:

1) Employees Share (12%) in EPF i.e. 12% of 20000 = INR 2,400

2) Employer’s Share in EPF (3.67%) i.e. 3.67% of 20000 = INR 734

3) Employer’s Share in EPS (8.33%) i.e. 8.33% of 20000 = INR 1,666

(Employer’s EPF contribution is EPF+EPS)


4) Employer’s Share in EDLIS (0.5%) i.e. 0.5% of 20000 = INR 100

5) Employer’s Administration Charges (1.11%) i.e. 1.11% of 20000 = INR 222

Adding 1 to 3, total amount of INR 4, 800 gets deposited every month as a part of EPF.

Bonus read: Provident Fund Premature Withdrawal

Where is the EPF Money Invested

The EPF currently is allowed to invest only in debt – such as government bonds. It is not allowed to invest in equity.

Benefit of EDLIS (Employee Deposit Linked Insurance Scheme)

The EDLIS goes to pay life insurance to the family members of the PF member in case of her death during the employment. The EDLIS has a maximum payout of INR 1 Lac.

EPF is unlikely to be adequate to cover all the retirement needs, especially considering the inflation. Also read benefits of EPF premature withdrawal

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