Understanding Employers EPF Contribution: A Guide to Calculation in India

TrackMyPF by Finnable, Download for Smarter PF Management

The Employees’ Provident Fund (EPF) is a social security scheme in India designed to secure your financial future post-retirement. It works by mandating both employers and employees to contribute a specific percentage of their basic salary (and dearness allowance, if applicable) towards a retirement corpus. This contribution from your employer is a significant benefit that adds up over your working years.  Understanding your employer’s EPF contribution not only empowers you financially but also allows you to track your contributions and ensure everything is in order.

This guide delves into the intricacies of employers’ EPF contribution in India, explaining the calculation process, components, and essential details you need to know.

What is an Employer’s EPF Contribution?

An employer’s EPF contribution refers to the mandatory amount your employer deposits into your EPF account every month. This contribution is a percentage of your basic salary (and dearness allowance) and is crucial for building a healthy retirement fund.

Employers EPF Contribution vs. Employee Contribution

It’s important to distinguish between your contribution and the contribution made to the EPF by employer to the EPF scheme. As an employee, you contribute a fixed 12% of your basic salary and dearness allowance towards your EPF account.

On the other hand, your employer contributes a total of 12% as well, but this contribution is divided into two parts:

  • 3.67% towards your Employee’s Provident Fund (EPF) account: This portion goes directly into your EPF account, accumulating with your contributions and earning interest.
  • 8.33% towards the Employee’s Pension Scheme (EPS) account: This portion gets deposited into your EPS account, which provides you with a monthly pension after retirement.

Key Points to Remember:

  • EPF Employers’ contribution is mandatory under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
  • There’s a minimum salary threshold for EPF eligibility. Currently, it applies to establishments with more than 20 employees where at least one employee earns more than Rs. 15,000 per month basic salary. For establishments with less than 20 employees, the threshold is Rs. 5,000 per month.

Calculating Your Employer’s EPF Contribution

Calculating the contribution to EPF by the employer is a straightforward process. Here’s a breakdown:

  1. Identify your Base Amount: This is the sum of your basic salary and dearness allowance (if applicable).
  2. Employer’s Total Contribution: Multiply the base amount by 12%. This represents the total amount your employer contributes towards your social security schemes.
  3. Employer’s EPF Contribution: Multiply the base amount by 3.67%. This is the specific portion that gets deposited into your EPF account.


Let’s assume your basic salary is Rs. 30,000 per month and you receive a dearness allowance of Rs. 5,000.

  1. Base Amount: Rs. 30,000 (Basic Salary) + Rs. 5,000 (Dearness Allowance) = Rs. 35,000
  2. Employer’s Total Contribution: Rs. 35,000 (Base Amount) * 12% = Rs. 4,200
  3. Employer’s EPF Contribution: Rs. 35,000 (Base Amount) * 3.67% = Rs. 1,284.50

Therefore, your employer contributes Rs. 4,200 per month towards your social security, of which Rs. 1,284.50 goes directly into your EPF account.

Important Considerations Regarding Employer’s EPF Contribution

While the calculation itself is simple, here are some additional factors to keep in mind:

  • Salary Capping for EPS Contribution: The 8.33% contribution towards your EPS account is subject to a salary cap of Rs. 15,000 per month. This means that even if your base salary is higher, the EPS contribution will be calculated only at Rs. 15,000.
  • Changes in Employer Contribution Rates: While the current contribution rate is 12% each for employees and employers EPF contributions, the government can revise these rates in the future. It’s advisable to stay updated on any potential changes.
  • Tracking Your Contribution: You can access your EPF passbook online through the Unified Portal (UMANG) app or the EPFO website (https://www.epfindia.gov.in/). This allows you to monitor your contributions from both yourself and your employer.

Exceptions to the Standard Employer’s EPF Contribution Rate

The 12% employers EPF contribution rate applies to most establishments with more than 20 employees. However, there are a few exceptions:

  • Establishments with Less Than 20 Employees: For these establishments, the combined employer and employee contribution rate reduces to 10% of the basic salary. This 10% is further divided, with 3.67% going towards the EPF for employees and 6.33% going towards the EPS (capped at Rs. 1,250 per month).
  • Sick Industrial Units: Companies declared sick by the Board for Industrial and Financial Reconstruction (BIFR) may have a reduced contribution rate as per specific regulations set by the EPFO.
  • Certain Specified Industries: The EPF scheme offers a reduced contribution rate of 10% for some specified industries like Jute, Beedi, Brick, Coir, and Guar gum factories. This 10% is again divided into 3.67% for EPF and 6.33% for EPS (capped at Rs. 1,250 per month).

Voluntary Higher Contribution

While the standard contribution rate is 12%, both you and your employer can opt for a higher contribution if you wish to accumulate a larger retirement corpus. However, this requires a joint application from both parties to the EPFO. It’s important to note that the employer will only contribute the additional percentage you choose, not match it.

Benefits of Employers’ EPF Contribution

EPF for employees has several benefits offered by employer’s EPF contribution:

  • Enhanced Retirement Savings: The employer’s contribution significantly boosts your retirement corpus, providing financial security after you stop working.
  • Tax Savings: Both your and your employer’s contributions towards EPF are tax-deductible under Section 80C of the Income Tax Act, 1961. This translates to lower tax liability.
  • Interest Earned: The EPF account earns a healthy rate of interest declared annually by the government. This further increases your retirement savings.

Employer’s EPF Contribution and Employer’s Responsibilities

Employers are not only obligated to contribute towards your EPF but also hold certain responsibilities:

  • Timely Deposit of Contributions: Employers must deposit their share and their contribution towards EPF within 15 days of the following month. Delays can attract penalties.
  • Registration with EPFO: Employers with eligible employees must register with the Employees’ Provident Fund Organisation (EPFO) and obtain a Unique Identification Number (UAN) for each employee.
  • Maintaining EPF Records: Employers are required to maintain accurate records of employee contributions and their contributions towards EPF.

Taking Charge of Your EPF with TrackMyPF Balance by Finnable

TrackMyPF Balance by Finnable takes understanding employer contributions a step further.

This user-friendly mobile app goes beyond simply offering a downloadable version of your EPF passbook. TrackMyPF Balance seamlessly integrates with your EPFO account, empowering you with functionalities that directly address understanding your employer’s contribution to your EPF. Here’s how TrackMyPF Balance by Finnable enhances your understanding of employer contributions in India:

  • Effortless Contribution Monitoring: TrackMyPF Balance provides real-time access to both your contributions and your employer’s contributions to your EPF account. This allows you to easily verify if your employer is fulfilling their obligations and contributing the mandated 3.67% of your base salary towards your EPF.
  • Imagine this: You no longer need to perform manual calculations based on your salary structure. With TrackMyPF Balance, you can see a clear breakdown of contributions, making it easier to identify any discrepancies or inconsistencies.
  • Transparency Throughout the Process: Understanding the breakdown of contributions is crucial. TrackMyPF Balance not only displays the total employer contribution but can also potentially categorize it further.

In essence, TrackMyPF Balance by Finnable acts as a transparency tool when it comes to employer contributions.  It empowers you to monitor contributions in real time, understand potential breakdowns based on data availability, and analyze historical trends, all within a user-friendly mobile app.


Understanding your employer’s EPF contribution is crucial for informed financial planning. By knowing the calculation process, relevant considerations, and exceptions, you can ensure your employer is fulfilling their obligations and maximize your retirement savings potential. Remember, a healthy EPF corpus goes a long way in securing a comfortable and financially secure post-retirement life.


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Amit Arora

I am a seasoned retail banker with over 21 years of global experience across business, risk and digital. In my last assignment as Global Head Digital Capabilities, I drove the largest change initiative in the bank to deliver the end-to-end digital program with over US$1 billion in planned investment. Prior to that, as COO for Group Retail Products & Digital, I implemented a risk management framework for retail banking across the group.
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