Where Your PF Money Goes: Employee, EPF, EPS and EDLI

The rates and the ceiling, as EPFO states them

EPFO's wage-ceiling FAQ, issued with notification S.O. 5109(E), sets out the following:

• The ceiling rises from ₹15,000 to ₹25,000 a month, effective 17 September 2026.
• EPF wages are basic plus dearness allowance plus retaining allowance, not your gross salary.
• Employee contribution: 12% of EPF wages.
• Employer contribution: 12%, of which 8.33% goes to EPS and the balance of 3.67% to EPF.
• Employer-only charges: EDLI at 0.5% and admin at 0.5%.
• EPS membership applies only where wages at joining are ₹25,000 or less.

Above the ceiling, you and the employer may contribute on higher wages with consent. Whether yours does is a line in your offer or payroll policy.

Three profiles, rupee by rupee

All three profiles are hypothetical. Each figure is rounded to the rupee, and employer EPF is 12% minus the EPS share, which is how EPFO's ₹25,000 example reconciles.

The EDLI and admin charges sit on top of these and never reach your account. For the first two profiles, they are 0.5% each: ₹110 and ₹110 for the ₹22,000 profile, and ₹125 and ₹125 for the ₹25,000 one. The ₹35,000 profile's EDLI and admin base is not set out in the FAQ passage used here, so check it with payroll.

The third column surprises people. A higher earner who joined above ₹25,000 is not in EPS, so the employer's full 12% on the ceiling lands in EPF. The monthly EPF credit is ₹6,000, compared with ₹3,917 for someone exactly at the ceiling who is in EPS.

September 2026: the month with two ceilings

EPFO's FAQ says September 2026 is prorated: the old ceiling applies to 1–16 September and the new one to 17–30 September. For someone on ₹30,000 basic who contributes on the ceiling, a day-weighted split looks like this:

• 16 ÷ 30 × ₹15,000 × 12% = ₹960
• 14 ÷ 30 × ₹25,000 × 12% = ₹1,400
• Employee contribution for September: ₹2,360

That day-weighting is our illustration of "prorated". Your payroll software may round differently, so compare it with your September payslip rather than treating ₹2,360 as the exact figure.

# Synthetic basic pay. EPF split per EPFO's 2026 wage-ceiling FAQ.
def rupee(x):
    return int(x + 0.5)          # half-up rounding, as in EPFO's ₹25,000 example

def pf_split(basic_da, eps_member, ceiling=25000, full_wages=False):
    wage = basic_da if full_wages else min(basic_da, ceiling)
    employee = rupee(0.12 * wage)
    eps = rupee(0.0833 * min(wage, ceiling)) if eps_member else 0
    employer_epf = rupee(0.12 * wage) - eps
    return {"employee": employee, "eps": eps, "employer_epf": employer_epf,
            "epf_credit": employee + employer_epf}

def september_2026_employee(basic_da):
    old = min(basic_da, 15000) * 16 / 30
    new = min(basic_da, 25000) * 14 / 30
    return rupee(0.12 * (old + new))

print(pf_split(22000, True))
print(pf_split(25000, True))
print(pf_split(35000, False))
print(pf_split(35000, False, full_wages=True))    # contributing on full basic
print(september_2026_employee(30000))

The fourth line shows the opt-in case: 12% of ₹35,000 each side, or ₹8,400 a month into EPF. It costs you ₹1,200 a month more in take-home pay than contributing on the ceiling. EPF on the ceiling or full basic works through that trade.

Checking your passbook against the payslip

Each month, your EPF passbook should show two credits: the employee share, equal to the PF deduction on your payslip, and the employer EPF share. If you are an EPS member, the pension contribution is not part of your EPF balance, so never add it to the EPF total even where the passbook lists it. A mismatch usually has one of three causes: a month missing because payroll was late; contributions computed on the wrong wage, such as gross instead of basic; or a September 2026 figure that ignored the ceiling change. Raise it with payroll with the month and the two figures side by side.

What the split means for tax and for withdrawals

Your own 12% is an eligible item under section 123 of the Income-tax Act, 2025, within the ₹1,50,000 cap. That deduction exists only under the old regime; the new regime default in tax year 2026-27 does not allow it. The employer's contribution is inside the ₹7,50,000 aggregate limit in section 17(1)(h), which few people at these wage levels approach.

The EPF and EPS balances are governed by different withdrawal rules. The EPS rules are not covered here. What happens to the EPF balance if you withdraw it early is worked in withdrawing PF before five years.

Reconciling a passbook against payslips is ordinary spreadsheet and SQL work. Our Data Analyst programme runs 3–4 months, live online with optional in-person labs at our Noida centre.