EPF (Employees' Provident Fund)
A mandatory retirement savings scheme for employees of covered establishments, with both employer and employee contributing a fixed percentage of basic salary each month.
EPF is a retirement savings scheme, mandatory for establishments above a specified employee count, under which both employee and employer contribute a fixed percentage, currently 12% each, of basic salary plus dearness allowance every month. The employee's full contribution goes into their own EPF account; part of the employer's contribution is routed to the Employees' Pension Scheme (EPS), with the remainder added to the EPF account.
Withdrawals, and the interest credited each year, follow specific tax treatment depending on how long the account has been active and the circumstances of withdrawal, generally tax-free if withdrawn after five years of continuous service. EPF is separate from voluntary schemes like PPF, though both fall under the broader umbrella of retirement-focused, government-backed savings instruments.
This glossary entry is for general informational purposes only and does not constitute professional tax, legal, or financial advice. Rules and rates change, so consult a qualified Chartered Accountant for advice specific to your situation.