Salary BreakdownPublished: 2026-09-01•6 min read
EPF Contribution Rules 2026: Employee vs Employer Share & Tax on ₹2.5L
Detailed breakdown of the 12% EPF structure, Pension Scheme (EPS), and how interest exceeding ₹2.5 Lakh annual contribution is taxed.
By Tax & Financial Research Team•Verified for FY 2026-27
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How EPF Contributions Work
For salaried employees, Provident Fund (EPF) is mandatory for organizations with 20+ employees.
Monthly Contribution Split (12% of Basic + DA) 1. **Employee Share (12%):** 100% goes directly to EPF account. 2. **Employer Share (12%):** - **8.33%** goes to Employee Pension Scheme (EPS), capped at ₹1,250/month. - **3.67%** goes to EPF account.
Taxation on EPF Contributions > ₹2.5 Lakh If employee EPF contribution exceeds **₹2,50,000 per financial year**, interest earned on the excess contribution is **fully taxable** as income from other sources.
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Frequently Asked Questions
What is the current EPF interest rate for FY 2026-27?
The EPFO interest rate is declared at 8.25% per annum, credited annually to the subscriber account.