Provident Fund (PF) is a crucial savings plan for employees, offering long-term financial security. PF contributions help build a retirement corpus, providing stability for post-service years and covering expenses like medical bills or leisure activities.
It also serves as an emergency fund, allowing partial or full withdrawals under specific circumstances. Additionally, contributions made to the PF account are tax-exempt under Section 80 (C) of the Indian Income Tax Act, up to ₹1.5 Lakhs (if you’ve opted for the Old Tax Regime). Read this blog to compare the old and new tax regimes .
In this blog, we will explore what is PF and its benefits along with tax treatments. Let’s dive in!
According to the Employees' Provident Fund Act, your contribution is capped at 12% of your salary plus the dearness allowance. While your employer has to match this 12% contribution, 8.33% of this amount goes to the Employee Pension Scheme, and the remaining 3.67% goes to your PF account. PF is a part of your CTC (cost to company) and goes towards ensuring retirement benefits.
However, there are some disadvantages of PF in salary. For instance, premature withdrawals of more than ₹50,000 will attract a TDS of 10%. Similarly, exiting before the 5-year service term is completed, will also attract a tax penalty.
Learn more about EPF interest and how to calculate it here .
1. Employee's Contribution:
2. Employer's Contribution:
These contributions collectively form the total Provident Fund amount, which grows over time with accrued interest. The PF scheme aims to provide financial security to employees during their retirement by building a substantial savings corpus. The specific rates and rules may vary by country, and it's essential to be aware of the regulations governing PF contributions in the relevant jurisdiction.
It's essential to keep in mind that tax laws may change, so it's advisable to consult with a tax professional or check for the latest updates from the tax authorities.
The Provident Fund (PF) is a powerful savings plan that offers long-term financial security for employees. With contributions from both employees and employers, the PF account accumulates funds that earn an interest rate of 8.10%. This helps build a retirement corpus, providing stability and covering expenses in post-service years. The PF account also serves as an emergency fund, allowing withdrawals under specific circumstances. Additionally, contributions to the PF account are tax-exempt up to ₹1.5 Lakhs under Section 80 (C) of the Indian Income Tax Act. While PF offers numerous benefits, it's important to be aware of certain considerations, such as tax implications for premature withdrawals. Overall, the Provident Fund scheme serves as a gateway to a happy retirement, ensuring financial well-being for employees in the long run.
Understanding PF in salary benefits employees in the long term by facilitating informed financial planning, ensuring retirement savings, and potentially offering tax advantages. It provides a structured approach to wealth accumulation, contributing to financial security and stability in the later stages of one's career and beyond.
PF contributions consist of the employee's and employer's components. Employees usually contribute a percentage of their basic salary, and employers contribute both to the Employee Provident Fund (EPF) and the Employee Pension Scheme (EPS). The typical contribution rate is 12% of the basic salary for both employees and employers.
Key advantages of a PF account for retirement savings include tax benefits, a disciplined savings approach, employer contributions, and the potential for long-term wealth accumulation with compounded interest.
An employee contributes a percentage of their salary to PF, typically 12%, while the employer also contributes, divided into Employee Provident Fund (EPF) and Employee Pension Scheme (EPS) contributions. The employer's contribution is in addition to the employee's and includes both EPF and EPS components.
Yes, there are limits on individual PF contributions. The employee's contribution is typically capped at a percentage of their salary, commonly 12%. However, there isn't a specific upper limit for employer contributions.
Withdrawal from a PF account is allowed for purposes like retirement, unemployment, or medical emergencies. The process involves submitting a withdrawal application to the Employee Provident Fund Organization (EPFO) through the employer.
Products on our platform | Details |
---|---|
Unified Payments Interface (UPI) | Epifi Technologies Pvt. Ltd ('Epifi Tech') is a Third-Party App Provider ('TPAP') - and acts as a service provider and participates in UPI through a Payment Service Provider ('PSP') Bank (Federal Bank). |
Savings Account and Deposits | Federal Bank offers savings account, fixed deposits and smart deposits to users on the Fi App (through Epifi Tech). Users' savings account and deposits are securely opened with Federal Bank. |
Cards | Fi Brand Pvt. Ltd. markets and distributes co-branded cards in partnership with Federal Bank and Visa. Cards are issued by Federal Bank. |
Loans | Epifi Tech facilitates loan distribution and acts as a lending service provider and/or digital lending application for various Banks, registered NBFCs and NBFC-P2P ('Lenders') List of Lenders. |
Mutual Funds | Epifi Wealth Pvt. Ltd. ('Epifi Wealth') is a registered investment adviser and provides a platform for mutual funds investment. Epifi Wealth has partnered with MFCentral to provide mutual funds analyser to users. |
Loans Against Mutual Funds | Epifi Tech in partnership with regulated entities including Epifi Wealth and Bajaj Finserv provides a platform for loans against mutual funds. |
US Stocks | Epifi Tech has partnered with US stock broker Alpaca Securities LLC to provide users the option to invest in US stocks. |
Connected Accounts | Epifi Wealth (as a financial information user), in partnership with Finvu and Onemoney, provides users the option to link their existing financial accounts on Fi. |
Credit Analyser | Epifi Tech (as a non-specified user) in partnership with Experian and CIBIL provides insights on users' credit scores |
Fi-Coins | Fi-Coins are earned under a reward programme for engaging with products and services on the Fi App. |
Fi Store | Fi-Coins can be redeemed on products and services listed on Fi Store such as merchandise, gift cards, air miles, among other things. |
1. Net Worth: Helps users get a view of their financial Net Worth — in accordance with their assets & liabilities
2. Wealth Maximiser: Analyses your finances, shares financial reports to make informed money decisions
These products are governed by our Terms and Conditions, Privacy Policy, and any other product and partner specific terms and conditions as communicated to you.
©epiFi Technologies Pvt. Ltd. 2025
Fi is a money management platform that offers the perfect solution for all your financial needs. The Federal Bank Savings Account offered through Fi is an online savings account that you can open in 3 minutes! It goes beyond online account opening, as it has helped reimagine the banking experience in India
Through Fi, you can do more: apply for an instant personal loan, pick from many types of Mutual Funds, select the best SIP to invest in US Stocks, apply for a forex-free Debit Card (works for select account plans) to use while travelling abroad, analyse/improve their portfolio, get a 360-degree view of your spend insights and take steps building wealth.
You can also utilise Fi's free personal loan resources, such as the Personal Loan and EMI calculator, before proceeding to the quick loan application process. All of this is why over 35 lakh Indians feel that Fi is the only financial app you will ever need.