EPFO (Employees' Provident Fund Organisation)

The Employees' Provident Fund Organisation is a statutory body under the Ministry of Labour and Employment that administers three linked schemes.

• The Employees' Provident Fund Scheme, 1952, which builds a retirement corpus the employee can withdraw or transfer.
• The Employees' Pension Scheme, 1995, which pays a monthly pension after retirement.
• The Employees' Deposit Linked Insurance Scheme, 1976, which pays a lump sum to the nominee if the member dies in service.

Employees see all three on the payslip as a single deduction, which is why the split between them is so often misunderstood.

The schemes were created under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. That Act was repealed on 21 November 2025 by the Code on Social Security, 2020, which absorbed it along with the Employees' State Insurance Act, the Payment of Gratuity Act, the Maternity Benefit Act and five further statutes. The Organisation, the Central Board and the three schemes all continue under the Code; what changed is the statute they sit under and, more consequentially for payroll, the definition of the wages they are calculated on.

Registration is compulsory for establishments in scheduled industries employing 20 or more persons. Some categories are notified at a lower threshold, and an employer below the threshold can register voluntarily with the consent of employees.

Two rules catch employers out. First, coverage is sticky: once the Act applies, it continues to apply even if the headcount later drops below 20. Second, the count generally includes contract and casual workers engaged through the establishment, not just employees on the direct payroll.

Registration must be completed within a month of reaching the threshold, and delay attracts penalties.

The rate in the Code and the rate most employers actually run are not the same figure, and it is worth knowing which is which. Section 16(1)(a) sets the employer's contribution at ten per cent of wages, with the employee's contribution equal to it, and a proviso lets the Central Government substitute twelve per cent by notification for establishments or classes it specifies. Twelve per cent is the rate in general use, carried over from the 1952 Act, but it reaches an establishment through that notification rather than from the section itself. The table below sets out the twelve per cent structure. The notification fixing it, and the schemes that govern the split, were not read for this entry, so treat the figures as the position to confirm rather than as statutory text.

The employer also pays an amount towards linked insurance and administrative charges, which are charged separately and not deducted from the employee.

Here is a worked example at the ceiling. On wages of 15,000 rupees, the employee contributes 1,800 rupees, the employer sends 1,250 rupees to the pension scheme, and the remaining 550 rupees goes to the provident fund.

The 8.33 per cent pension share, the 3.67 per cent balance and the 15,000 rupee wage cap are features of the schemes framed under section 15, not of the Code's own sections. Rates and administrative charges are set by notification and have been revised more than once. Confirm the figures currently in force before configuring payroll.

Two questions that used to have simple answers, and one of them changed with the Code.

The statutory ceiling for mandatory coverage is 15,000 rupees a month. An employee joining with wages above that figure and no existing provident fund account is treated as an excluded employee and is not compulsorily covered. Most employers go beyond the minimum: contributions can be made on actual wages above the ceiling by agreement, and many organisations do so because employees value the corpus. The pension share is the exception, since the 8.33 per cent is calculated against the capped wage regardless, so a higher salary does not automatically buy a larger pension entitlement.

What changed is wages. Under the 1952 Act the base was basic wages plus dearness allowance and retaining allowance. The Code keeps that list but adds a condition: where the excluded components together exceed one-half of total remuneration, the excess is added back and counted as wages.

For a low-basic structure this raises the base, and it can push an employee who was contributing below the ceiling up to it. Consider an employee on a total package of 40,000 rupees a month, of which basic is 12,000 and the remaining 28,000 sits in house rent allowance and special allowance.

On the old base of 12,000 rupees the employee's contribution was 1,440 rupees. On the ceiling-capped figure of 15,000 it is 1,800, with the employer's share rising to match. That is 360 rupees a month each way for one employee, from the same payslip and the same salary.

Both the ceiling and the wage definition are worth verifying before configuring payroll. The ceiling has been revised upward over the years and is periodically debated, so treat 15,000 as a figure to confirm rather than a permanent constant, and confirm how the add-back interacts with the ceiling in your own case.

The Universal Account Number is a permanent 12-digit number issued to each member. It stays with the employee across jobs, and every employer-issued member ID is linked to it.

Before the UAN, changing jobs meant filing a transfer claim and often losing track of an old balance. Now the employee links Aadhaar, PAN and bank details once, activates the UAN on the member portal, and can view the passbook, raise claims and transfer balances online.

For employers the practical duty is to collect an existing UAN at onboarding rather than generating a new one. Duplicate UANs are common, tedious to merge, and they delay the employee's withdrawal at exactly the moment they need the money.

The core monthly obligation is the electronic challan-cum-return, filed on the EPFO employer portal. It lists each member, their wages and the contributions due, and generates the challan used to pay.

Payment and filing are due by the 15th of the month following the wage month. Late payment attracts simple interest on the arrears plus damages, charged at rates that increase with the length of the delay.

An employer that deducts an employee's share but does not deposit it is in a materially worse position than one that simply pays late. That money is held in trust, and non-deposit can attract prosecution rather than only a financial penalty.