EPF Contribution Rate 2018-19 (Employee & Employer)

As an employee we will contribute to EPF scheme with or without our interest, as it is mandatory. But do you really know how much EPF contribution is mandatory for employee? How much your Employer is contributing to your EPF account? And what are other contributions like EPS & EDLI? In this article, I will try to explain the complete details of EPF Contribution Rate and how it works.

EPF is one of the best investment option in India to create a long term wealth. Or you can say a very good option to generate a huge retirement corpus as the locking period is link with your employment. Although there are many withdrawal or premature withdrawal rule setc which I will talk in separate article.

Details of EPF contribution Rate and Rules

You might have noticed in your salary slip that every month a fixed amount of money is deducting as EPF deductions. In case of any kind of salary hike, this amount increases automatically. That means, it is calculating based on certain formula. Here is the details about the same.

  • Employee Contribution: 12% of Basic + DA directly go to EPF account
  • Employer Contribution: 12% is also deducting from Employer, out of which 3.66% is going to your EPF account and then remaining 8.33% in your EPS (Employee Pension Scheme) account with a limit of max Rs 1250.
  • Employer Expenses: There are certain expenses from Employer side as well and that is 0.85% for administrative charges and 0.01% for EDLI, that I will explain in later part of this article.

Mandatory contribution of 12% for both Employee & Employer

As an employee, you have to contribute 12% of your Basic + DA (It also includes commission if it is given as a fixed percentage of the turnover) towards your EPF account.

On top of that your employer is also paying 12% to match with the employee contribution as per the rules from EPFO. But employer contribution doesn’t go directly to EPF account, as few portion is routed to EPS account as well.

In many cases while preparing the CTC of an employee, the employer makes sure that the Employer contribution is also part of that CTC and together they make sure total 24% amount to be deducted for EPF is there in your CTC only. So take a close look at your CTC and then burgain properly.

8.33% contribution to EPS Account

EPS account is mandatory for every employee which is earning Rs 15,000 per month. So, 8.33% of 15,000 is nothing but Rs 1250 is considered as upper limit of contribution towards your EPF account.

I am sure that many of us doesn’t aware about that if you are contributing for EPF, paralley your EPS account is also accumulating money. This you should not forget as by the time your retire, a corpus will be waiting for you, which you can encash as per the rules of EPS, even if you are working in a private company.

VPF or Voluntary PF contribution

EPF is a very good option to save income tax under section 80C and ne can get good interest rate on long term investment. Besides this mandatory investment bracket, even if employee want to contribute more amount of money in EPF, then he/she can choose the VPF way.

You can contribute up to the 100% of the basic salary. This excess deposit is called as the Voluntary PF contribution. If you are ok to deposit more money in long term then VPF is a very good way invest & save tax. The return from EPF account is 1% higher than the PPF account.

Contribution for EDLI (Employee Deposit Linked Insurance Scheme)

Do you know that as soon you become a member of EPFO and start contributing towards your EPF account, besides EPS account a life insurance cover is also applied on you. This is called EDLI or Employee Deposit Linked Insurance Scheme.

For this death cover, employer has to contribute 0.01% amount or employee’s salary as per the rules. The employer has to deposit minimum Rs 200 for EDLI scheme for the life cover of employee up to Rs 6 lakhs, in case its total EDLI contribution does not cross Rs 200.

EPF account Administrative Expense By Employer

So, it is obvious that employer will also charge some amount to maintain your account details and further information as administrative charges which is 0.85% of the employee salary. Before 2015, it was 1.10%.

Although the rate has gone down due to digitisation of the process and the launch of UAN (Universal account number).

So, these are the basic rates of EPF contribution which as an employee one should know and understand may be without our knowledge we are actually investing in long term in couple of products like pension account, life insurance etc through subscribing to EPFO.


I am a passionate blogger and personal finance enthusiast. Mostly share about investment tips, insurance guide, banking how to guides and various personal finance hacks through my blog. Checkout my first YouTube Channel on Personal Finance Guide.

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