The Employees' Provident Fund (EPF) is a retirement savings scheme under the EPF & MP Act, 1952, mandatory for organizations with 20 or more employees. Both the employee and employer contribute 12% of the employee's basic salary + dearness allowance each month. The employer's 12% is split — 8.33% goes to the Employees' Pension Scheme (EPS) and the remaining 3.67% to the EPF account.

The EPF interest rate is set annually by the EPFO (Employees' Provident Fund Organisation) and approved by the government. For FY 2023-24, the interest rate is 8.25% per annum, compounded monthly. The interest is calculated on the monthly running balance and credited to the EPF account at the end of the financial year.

Full EPF withdrawal is permitted on retirement (at age 58), on reaching 54 years of age with the intent to retire within a year, or after 2 months of unemployment. Partial withdrawal is allowed for specific purposes such as housing (after 5 years), marriage (after 7 years), medical treatment, higher education, or natural calamity, subject to limits defined by the EPFO.

EPF (Employees' Provident Fund) is the main provident fund account where both employee and employer contributions accumulate with interest. EPS (Employees' Pension Scheme) is funded entirely by the employer's contribution (8.33% of basic salary, capped at ₹1,250/month for a ₹15,000 salary cap) and provides a monthly pension after retirement. EPS does not earn interest — it pays a pension based on years of service and average salary.

EPF interest is tax-free up to an annual employee contribution of ₹2.5 lakh. For contributions above ₹2.5 lakh per year (₹5 lakh for government employees), the interest earned on the excess amount is taxable under the 'Income from other sources' head. This rule applies from FY 2021-22 onwards. The maturity amount and withdrawals after 5 years of continuous service remain fully tax-exempt.