Question 1

What is the current EPF interest rate?

Accepted Answer

The current EPF interest rate is 8.25% per annum for FY 2024-25. This rate is reviewed and declared by the EPFO annually. EPF offers higher returns than PPF (7.1%) and is backed by the government, making it a safe retirement savings option.

Question 2

How much does the employer contribute to EPF?

Accepted Answer

The employer contributes 12% of basic salary + DA. However, this is split: 3.67% goes to EPF account and 8.33% goes to EPS (Employee Pension Scheme). The employee's 12% contribution goes entirely to EPF.

Question 3

Is EPF withdrawal taxable?

Accepted Answer

EPF withdrawal is tax-free if you have completed 5 years of continuous service. If withdrawn before 5 years, the entire amount including employer contribution and interest becomes taxable. TDS at 10% is deducted if PAN is provided, else 34.6%.

Question 4

What is the tax benefit on EPF contribution?

Accepted Answer

Employee EPF contribution qualifies for Section 80C deduction up to Rs. 1.5 lakh. Employer contribution is tax-free up to 12% of basic salary. Interest is tax-free if employee contribution is up to Rs. 2.5 lakh per year (taxable above this limit from FY 2021-22).

Question 5

Can I contribute more than 12% to EPF?

Accepted Answer

Yes, through Voluntary Provident Fund (VPF), you can contribute beyond the mandatory 12% up to 100% of basic salary. VPF earns the same interest rate as EPF (8.25%) and enjoys similar tax benefits under Section 80C.

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