Overview
The Provident Fund (PF) is one of the most important financial security systems for employees in India. It acts as a long-term savings mechanism that ensures financial stability after retirement. In the Indian employment structure, PF plays a crucial role in helping employees create a secure financial base for the future.
If you’ve ever wondered what is PF and how it benefits employees in India, this guide explains it in detail.
What is PF?
PF, or Provident Fund, is a government-backed savings scheme designed to help employees build a financial cushion during their working years.
It is primarily managed under the Employee Provident Fund (EPF) scheme, which is mandatory for most salaried employees in India.
Many people often ask, “What is PF in salary slip?” PF is the portion deducted from your salary each month and contributed toward your retirement savings.
PF vs EPF:
- PF is the general term for the Provident Fund.
- EPF meaning refers specifically to the Employee Provident Fund, governed by the EPFO for organized-sector employees.
In simple terms, PF ensures disciplined long-term savings and retirement planning for individuals across India.
Types of Provident Fund in India
Provident Fund in India is categorized into three major types:
1. Employee Provident Fund (EPF)
- Applicable to salaried employees in private and government sectors.
- Managed by the Employees’ Provident Fund Organisation (EPFO).
- Contributions are shared by both employer and employee.
2. Public Provident Fund (PPF)
- Open to all individuals, including self-employed people and freelancers.
- Offers attractive interest rates and tax benefits.
- Has a long tenure of 15 years (extendable).
3. General Provident Fund (GPF)
- Only for government employees.
- Contribution is made directly from salary.
- Managed by the respective government departments.
Each type differs in eligibility, contribution structure, management authority, and withdrawal rules.
How Does PF Work?
PF works on a simple contribution model where both the employee and employer deposit a percentage of the employee’s salary every month.
- Standard PF contribution rate: 12% of basic salary + dearness allowance (DA).
- The amount collected in the PF account earns interest annually, declared by EPFO.
- The Employees’ Provident Fund Organisation (EPFO) manages, tracks, and regulates PF contributions and withdrawals.
- The amount keeps compounding over the years, creating significant savings.
Example:
If your basic salary is ₹30,000, then your PF contribution (12%) would be ₹3,600 per month. Your employer contributes an equal amount. Over the years, this grows into a substantial corpus due to annual compounding interest.
PF Account and UAN (Universal Account Number)
Every employee registered under the EPF system is assigned a UAN (Universal Account Number).
- UAN acts as a central ID that links all your PF accounts, even if you switch jobs multiple times.
- Employees can log in to the EPFO portal or use the EPFO/UMANG app to check PF balance, update KYC, and manage their accounts.
- UAN simplifies PF transfers between organizations, eliminating paperwork and delays.
PF Contribution Breakdown
PF contribution is shared between employer and employee. Here’s the breakup:
| Component | Contribution |
| Employee Contribution | 12% towards PF account |
| Employer Contribution | 3.67% towards PF |
| Employer Contribution (EPS) | 8.33% towards Employee Pension Scheme (EPS) |
This structure ensures that a part of your PF also goes toward pension benefits.
Benefits of PF for Employees
PF offers several long-term financial advantages:
- Financial security after retirement through a substantial accumulated corpus.
- Tax benefits under Section 80C on contributions up to ₹1.5 lakh.
- Pension benefits through EPS after completing required years of service.
- Insurance coverage through EDLI (Employee Deposit Linked Insurance).
- High interest accumulation, making PF one of the safest long-term investment options.
- Partial withdrawal allowed for emergencies like medical needs, education, or home purchase.
PF Withdrawal Rules and Process
PF withdrawal is allowed under certain conditions, such as:
- Retirement at age 58
- Changing jobs (PF can be transferred or partially withdrawn)
- Unemployment for more than 1 or 2 months
- Medical emergencies
- Higher education
- Home loan repayment or house construction
PF withdrawal process:
- Log in to the EPFO member portal via UAN.
- Go to “Online Services” → “Claim (Form 31, 19, 10C)”.
- Select the type of withdrawal.
- Submit Aadhaar-verified claim.
Premature withdrawal may have tax implications if PF is taken out before completing 5 years of service.
How to Check PF Balance Online
Employees can check their PF account balance through multiple methods:
1. EPFO Portal
Log in using UAN → View → PF Passbook.
2. UMANG App
Access EPFO services, view passbook, submit withdrawal requests.
3. SMS Service
Send EPFOHO UAN ENG to 773829XXXX.
4. Missed Call Service
Give a missed call to 011-22901406 from your registered mobile number.
These methods make it easy to monitor PF growth at any time.
Difference Between EPF and PPF
| Basis | EPF | PPF |
| Eligibility | Salaried employees | Anyone (including self-employed) |
| Contribution | Employer + Employee | Individual only |
| Tenure | Active until employment/retirement | 15 years (extendable) |
| Management | EPFO | Government via post offices & banks |
| Withdrawal | Allowed under conditions | Partial after 5 years |
Tax Benefits on PF
PF enjoys EEE (Exempt-Exempt-Exempt) status:
- Contribution is tax-exempt under Section 80C.
- Interest earned is tax-free (up to the specified limit).
- Maturity amount is also tax-free if withdrawn after 5 years of continuous service.
However, premature withdrawals can attract taxes.
Latest Updates on PF (2025-26)
As of 2025-26:
- The current EPF interest rate is (insert the latest EPFO-declared rate, e.g., 8.25%).
- Aadhaar-KYC verification is mandatory for withdrawals and transfers.
- Digital reforms like automated claim settlement and e-nomination have improved the PF experience.
(You can update the exact interest rate based on the latest EPFO notification.)
Conclusion
PF is one of the most reliable and tax-efficient savings instruments for employees in India. It ensures financial stability, long-term security, and peace of mind.
Now that you know what PF is and how it works, make sure to monitor your contributions and plan your future wisely.
Frequently Asked Questions
1. What is PF in salary slip?
It refers to the monthly contribution deducted from your salary toward the Provident Fund.
2. What happens to PF after changing jobs?
Your PF account can be easily transferred using your UAN.
3. How much PF is deducted from salary?
Typically, 12% of your basic salary + DA.
4. Can I withdraw PF before retirement?
Yes, under conditions like unemployment, medical emergencies, or home loan repayment.
5. Is PF mandatory for all employees?
PF is compulsory for organizations with 20+ employees and for employees earning up to ₹15,000 basic salary (with optional participation for higher earners).
