Provident Fund (PF)

The Provident Fund (PF) is one of the most widely-used investment schemes by the salaried class in the country.

The benefits of PF are extended to all establishments with 20 or more employees. Unfortunately, the past few years have seen the interest rate on it steadily fall, hitting a five-year low of 8.55% in 2017-18. But the buzz is that this year won't see a further dip - the rate is expected to hold steady - given the upcoming general elections, which is great news for the over six crore subscribers of the Employees' Provident Fund Organisation (EPFO).

Employee’s Provident Fund is a retirement benefit scheme that’s available to all salaried employees. This fund is maintained and overseen by the Employees Provident Fund Organisation of India (EPFO) and any company with over 20 employees is required by law to register with the EPFO. It’s a savings platform that helps employees save a fraction of their salary every month that can be used in the event that you are rendered unable to work, or upon retirement.


  • Provident Fund Deduction from Salary

    When you start working, you and your employer both contribute 12% of your basic salary (plus dearness allowances, if any) into your PF account.

  • Interest on PF

    While your contributions are made monthly, the interest is calculated yearly. At the start of every year, you have an opening balance (which is the amount accumulated till that point). Your opening balance for the next year would be: opening balance + total monthly contributions + interest on the (old opening balance + contribution)

  • Tax Benefits

    The employer contribution to your PF is tax-free, and your contribution is tax-deductible under Section 80C of the Income Tax Act. The money you invest in PF, the interest earned and the money you eventually withdraw after the mandatory specified period (5 years) are exempt from Income Tax.