EPF and VPF: Contribution, Interest Rate 8.25% and Tax
Updated 5 November 2026
The Employees' Provident Fund (EPF) is a retirement savings account for salaried people. Both you and your employer put in money every month, and it earns interest declared by EPFO every year.
Who puts in how much
| Contribution | Share of basic + DA |
|---|---|
| You (employee) | 12% |
| Employer, to EPF | 3.67% |
| Employer, to pension (EPS) | 8.33% (on wages up to ₹15,000, so at most ₹1,250 a month) |
| VPF (optional, by you) | Any extra %, up to 100% of basic + DA |
Interest rate
EPF pays 8.25% for FY 2025-26. VPF money earns the same rate.
Tax
- Your contribution counts under section 80C in the old regime.
- Interest is tax-free, except interest on your own contributions above ₹2.5 lakh a year (₹5 lakh if your employer does not contribute).
- Withdrawal after 5 years of continuous service is tax-free.
When can you withdraw?
Full withdrawal is allowed at retirement or after two months without a job. Part withdrawals are allowed for a house, medical treatment, marriage and education, under EPFO rules.
Is VPF worth it?
VPF earns the EPF rate, higher than PPF and most FDs, with the same tax treatment. The trade-off is that the money stays locked for long.
Try it
Open the EPF and VPF calculator and enter your own numbers. Words you don't know are explained in the money glossary.