How much PF is deducted from my salary?

Your EPF contribution is 12% of basic salary plus DA, matched by 12% from your employer. On a ₹12,00,000 package with basic at 40%, that is ₹4,800 a month from you and ₹4,800 from your employer. Employers applying the ₹15,000 statutory wage ceiling deduct ₹1,800 a month instead.

The two 12% contributions

EPF runs on basic salary plus dearness allowance, not on gross and not on CTC. You contribute 12% of that base and your employer contributes 12% as well. Only your half is a deduction from your payslip; the employer's half is usually included inside your CTC, so it reduces the gross you are offered rather than the net you are paid.

The two halves also do not go to the same place. Your entire 12% goes into your EPF account. Of the employer's 12%, a portion is diverted to the Employees' Pension Scheme — 8.33% of wages, but computed on a ₹15,000 wage ceiling, so it is capped at ₹1,250 a month. Whatever remains of the employer's contribution goes into your EPF account alongside your own.

Your monthly EPF deduction = 12% × (basic + DA)

What it comes to on real packages

With basic set at 40% of CTC, a ₹12,00,000 package has basic of ₹4,80,000, so your contribution is ₹57,600 a year — ₹4,800 a month, matched by the employer. A ₹20,00,000 package at the same 40% has basic of ₹8,00,000, so it is ₹96,000 a year, or ₹8,000 a month each side.

Where an employer applies the statutory ₹15,000 wage ceiling instead of full basic, each side contributes 12% of ₹15,000 — ₹1,800 a month, ₹21,600 a year — regardless of how large the actual basic is. Many private employers compute on full basic rather than the ceiling, which is why two colleagues at different companies on the same salary can show very different PF lines.

A higher basic means less cash and more EPF

Because the deduction is a percentage of basic, the share of your CTC labelled basic changes your monthly credit directly. On a ₹12,00,000 CTC, basic at 30% produces about ₹92,600 a month in hand; at 50% it is ₹87,800. The ₹4,800 difference goes into EPF instead of your bank account.

A higher basic also raises your gratuity entitlement, since gratuity is computed on last-drawn basic plus DA. So the trade is cash now against EPF and gratuity later. Neither setting is better in the abstract, and Muktify holds no view on which one suits you — the calculator just shows the arithmetic on both.

Tax treatment worth knowing

Your own EPF contribution qualifies as a Section 80C deduction, but only under the old regime — under the new regime it gives no deduction, though the money is still yours. The employer's contribution is not taxed as your income up to the statutory limits.

One threshold catches high earners: where your own contributions to EPF exceed ₹2,50,000 in a financial year, the interest credited on the excess is taxable. That applies to the employee share specifically, and it is the point at which voluntary top-ups above the mandatory 12% change character for tax purposes.

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