How much PF is deducted from my salary?
Your EPF contribution is 12% of PF wages, matched by 12% from your employer. PF wages are basic plus DA, but never less than half your total pay under the Code on Social Security. On a ₹12,00,000 package with basic at 40%, that is ₹6,000 a month from you and ₹6,000 from your employer. Employers that cap PF at the statutory wage ceiling — ₹25,000 a month since 17 September 2026, up from ₹15,000 — deduct ₹3,000 a month instead.
Try it on your numbers in the CTC to in-hand calculatorThe two 12% contributions
EPF runs on wages as the Code on Social Security defines them, not on gross and not on CTC. Wages are basic pay, dearness allowance and retaining allowance; HRA, conveyance, overtime, commission, statutory bonus and similar payments are left out — but only up to half of your total pay. If those left-out payments come to more than half, the excess is added back into wages, so with basic below half the package, PF in practice runs on half the package. 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 only up to the statutory wage ceiling. With the ceiling at ₹25,000 a month from 17 September 2026, that portion is capped at ₹2,082.50 a month (8.33% of ₹25,000; about ₹2,083 rounded), up from about ₹1,250 on the old ₹15,000 ceiling. Whatever remains of the employer's contribution goes into your EPF account alongside your own.
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 — under half the package, so PF wages are ₹6,00,000 and your contribution is ₹72,000 a year, ₹6,000 a month, matched by the employer. A ₹20,00,000 package at the same 40% has PF wages of ₹10,00,000, so it is ₹1,20,000 a year, or ₹10,000 a month each side.
Where an employer caps PF at the statutory wage ceiling instead of full wages, each side contributes 12% of ₹25,000 — ₹3,000 a month, ₹36,000 a year — however large PF wages actually are. The ceiling was ₹15,000, or ₹1,800 a month, from September 2014 until the Ministry of Labour raised it by notification S.O. 5109(E), in force from 17 September 2026. Many private employers compute on full wages rather than the ceiling, which is why two colleagues at different companies on the same salary can show very different PF lines.
What the new ₹25,000 ceiling does to a capped payslip
Take the same ₹12,00,000 package, with basic at 40% and the employer's PF inside the CTC. On the old ₹15,000 ceiling, a capped payslip left about ₹96,200 a month in hand. On the new ₹25,000 ceiling it is about ₹93,800 — ₹2,400 a month less, because each side now puts in ₹1,200 a month more and the employer's extra comes out of the same CTC. On full PF wages, with no cap, it is ₹87,800.
Who is affected depends on PF wages. At ₹15,000 a month or less, the cap never applied and nothing changes. Between ₹15,000 and ₹25,000, provident fund now runs on the whole of PF wages. Above ₹25,000, a capped contribution rises from ₹1,800 to ₹3,000 a month on each side. The money is not lost — it lands in your EPF account — but it is no longer in the monthly credit.
A higher basic only matters above half the package
Because PF wages never fall below half the package, the share of your CTC labelled basic changes your monthly credit only once it passes half. On a ₹12,00,000 CTC, basic at 30% and at 50% both produce about ₹87,800 a month in hand; at 60% it is ₹85,400, with the ₹2,400 difference going into EPF instead of your bank account. A structure that keeps basic low no longer shrinks the PF deduction on its own.
Gratuity is worked out on the same wages, so the same floor applies to it. Where basic is above half, 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.
CTC to in-hand
Questions people ask
How much PF is deducted from salary?
12% of PF wages from you, matched by 12% from your employer. PF wages are basic plus dearness allowance, and never less than half your total pay. On a ₹12,00,000 package with basic at 40% that is ₹6,000 a month each. Where the employer caps it at the ₹25,000 statutory wage ceiling, it is ₹3,000 a month each.
Is PF deducted on basic salary or gross salary?
On PF wages: basic salary plus dearness allowance, topped up so that they are at least half of your total pay. Under the Code on Social Security, allowances such as HRA and conveyance are left out of wages only up to half of pay; anything beyond that counts. So it is not simply basic, and not gross or CTC either.
Why did my PF go up when my basic did not change?
Under the Code on Social Security, PF runs on wages rather than basic alone, and allowances beyond half of your total pay count as wages. If your basic is below half your package and your employer does not cap PF at the wage ceiling, PF wages — and the deduction — can be more than 12% of basic.
Does my employer's PF contribution reduce my take-home pay?
Not directly, but it is usually included inside your CTC, so it reduces the gross salary you are offered for a given CTC. Only your own 12% appears as a deduction on the payslip itself.
What is the ₹1,800 PF deduction?
It was 12% of the old ₹15,000 statutory wage ceiling. From 17 September 2026 the ceiling is ₹25,000, so an employer that caps PF at the ceiling now deducts ₹3,000 a month from you and contributes the same, whatever your actual PF wages are.
Why did my PF deduction go up from ₹1,800 to ₹3,000?
Because the statutory wage ceiling rose from ₹15,000 to ₹25,000 a month on 17 September 2026, under notification S.O. 5109(E). If your employer caps PF at the ceiling and your PF wages are ₹25,000 a month or more, each side's 12% is now ₹3,000 instead of ₹1,800.
Can I opt out of PF?
Generally only if your PF wages exceeded the statutory wage ceiling when you first joined a covered establishment and you have never been an EPF member. That ceiling is ₹25,000 a month from 17 September 2026; it was ₹15,000 before. Once you are a member, membership continues across jobs.
Is EPF taxable?
The employee contribution is deductible under Section 80C in the old regime only. Interest on your own contributions above ₹2,50,000 in a financial year is taxable, and withdrawals before five years of continuous service can attract tax.
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Try it nowLast updated 28 September 2026. Figures reflect FY 2026-27 and are educational estimates, not advice. Muktify is not SEBI-registered and never recommends or ranks any instrument. How we write and check guides.