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EPFO Benefits – Tax Advantages, Employer Contributions & Key Perks

10 Jun 2025 by Team FinFIRST

EPFO Benefits – Tax Advantages, Employer Contributions & Key Perks

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When it comes to planning your financial future, EPFO (Employees' Provident Fund Organisation) stands out as one of the most tax-efficient, risk-free investment options for salaried employees in India. If you're looking to build wealth, save on taxes, and secure your future, EPFO is a smart move.

Here’s why EPFO is more than just a salary deduction:

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Employer Contributions

Every month, 12% of your basic salary goes into your EPF account and your employer matches that 12%. That’s a 100% return on your contribution right from the start. Over time, this match significantly boosts your savings, helping you build a solid retirement fund.

Tax-Free Returns – Keep More of What You Earn

The interest earned on your EPF corpus (currently around 8.25% p.a.) is completely tax-exempt under Section 10(11) of the Income Tax Act. That means more money in your hands when you retire, without the tax burden.

🔹 Section 80C Deduction – Cut Your Tax Bill

Your personal contribution towards EPF is eligible for a deduction under Section 80C, up to ₹1.5 lakh per year. This directly reduces your taxable income—helping you save more while you invest for the future.

🔹 Life & Pension Benefits – Safety Beyond Savings

Your EPFO membership includes two hidden gems at zero extra cost:

Employees’ Pension Scheme (EPS): Get a monthly pension after 10 years of service.
Employees' Deposit Linked Insurance (EDLI): Enjoy life cover up to ₹7 lakh, automatically covered as long as you're contributing to EPF.

✅ Benefit Snapshot

Interest Rate: ~8.25% per annum (compounded)
Tax Deduction: Up to ₹1.5 lakh under Section 80C
Tax-Free Returns: Under Section 10(11)
Pension: Eligible after 10 years of service
Life Insurance: Up to ₹7 lakh via EDLI

💡Track & Grow Your EPF Wealth

Want to keep an eye on your growing EPF corpus? Just visit the EPFO section in your Net Worth dashboard to view your contributions, check interest earned, and download your passbook in a single tap.

Final Thought:

Whether you're just starting your career or well on your way, EPFO offers a safe, rewarding, and tax-friendly way to build wealth for the future. With employer support, government backing, and long-term perks, it’s a retirement plan that works while you work.

Start early, stay invested, and let your EPF work for your tomorrow.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

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