Employees' Provident Fund(EPF)
The Employees' Provident Fund is India's mandatory retirement savings scheme, now operating under the EPF Scheme, 2026 as part of the Code on Social Security, 2020 consolidation (superseding the earlier EPF Act, 1952 framework). Employees and employers each contribute 12% of basic wages; a portion of the employer share funds the Employees' Pension Scheme. It is a core statutory cost of employing staff in India.
EPF operates as a defined-contribution retirement fund. Both employer and employee contribute 12% of the employee's basic wages plus dearness allowance each month (10% for specified establishments such as those with fewer than 20 employees, sick industrial units, or certain notified startups). The employee's full 12% goes into their EPF account; the employer's 12% is split, with 8.33% routed to the Employees' Pension Scheme (EPS) and the remaining 3.67% to EPF.
Mandatory coverage applies once basic wages fall at or below 15,000 rupees per month; enrollment above that threshold is voluntary for both parties. EPFO set the interest rate on EPF balances at 8.25% for FY 2025-26.
In June 2026, the Ministry of Labour and Employment notified the EPF Scheme, 2026, replacing the EPF Scheme, 1952, as part of the broader consolidation under the Code on Social Security, 2020. The change updates administrative and digital-compliance provisions - mandatory contribution rates and the wage ceiling are unchanged. For a US company using an EOR or setting up an Indian entity, EPF is a fixed, non-negotiable statutory cost added on top of gross salary for every India-based employee.
References
- EPFO - For Employees — Employees' Provident Fund Organisation (Ministry of Labour and Employment, Government of India)
- Central govt notifies Employees' Provident Fund Scheme 2026 — Akashvani (All India Radio News), Government of India