A = P × (1 + r/n)^(n×t)
A = Final amount
P = Monthly contribution (Employee + Employer)
r = Annual interest rate
n = Compounding frequency per year
t = Time in years
Provident Fund (PF) is a government-backed retirement savings scheme where both the employee and employer contribute a percentage of the employee's salary each month. These contributions earn interest over time, creating a substantial corpus for retirement. The fund is managed by the Employees' Provident Fund Organisation (EPFO) and provides financial security after retirement.
The PF scheme offers tax benefits under various sections of the Income Tax Act, making it an attractive investment option for salaried individuals. The interest earned is also tax-free up to certain limits, and the final corpus at retirement is exempt from tax under specific conditions.
Both the employee and employer contribute 12% of the basic salary plus dearness allowance to the PF account. The employee's entire contribution goes to the EPF, while the employer's contribution is split between EPF (3.67%) and EPS (8.33%). The government announces the interest rate annually, which is then credited to all accounts.
The power of compounding makes PF an excellent long-term investment. As you continue contributing over the years, your balance grows exponentially due to interest being calculated on both your contributions and the accumulated interest from previous years.
This calculator provides estimates based on the inputs provided and assumed constant interest rates. Actual PF accumulation may vary based on changes in interest rates, salary increments, and contribution patterns. For accurate information about your PF account, please check your official EPFO passbook or consult a financial advisor.