Provident Fund (PF) for Government Employees (EPF, GPF, and NPS)

Overview of Provident Fund

Provident Fund (PF) provides long-term financial security to Indian central and state government employees. It is a compulsory savings scheme that ensures retirement planning by mandating regular contributions during an employee's service. The three main schemes relevant for government workers are General Provident Fund (GPF), Employees' Provident Fund (EPF), and the National Pension System (NPS). Each has its own eligibility, benefit structure, and rules for return, withdrawal, and tax. This guide explains how these schemes work, their current rules (2026), and how to maximize retirement benefits.

Employee & Employer Contribution Rules

EPF (Employees' Provident Fund)

• Both employee and employer contribute 12% of Basic + Dearness Allowance (DA) monthly.
• Of employer's 12% share, 8.33% goes to Employees' Pension Scheme (EPS) and 3.67% to EPF corpus.
• Mandatory for most government-linked and organized private sector workers with salary ≤ ₹25,000/month (2026).
• Employees can contribute more via Voluntary PF (VPF) but the employer's share remains capped.

GPF (General Provident Fund)

• Only employee contributes (minimum 6%, usually up to 100% of emoluments).
• Available to government employees appointed before January 1, 2004 (pre-NPS service).
• All contributions accumulate with government-declared interest (no employer matching).

NPS (National Pension System)

• Government employees (joining after Jan 2004) contribute 10% of Basic + DA; government contributes 14%.
• Invested in a mix of equity, corporate/government bonds, and other instruments; returns are market-linked.
• NPS is mandatory for most new central/state government hires and voluntary for others.

Interest Rate (2026) and Annual Updates

• EPF: 8.25% per annum for FY 2025-26 — credited annually on the closing balance.
• GPF: 7.1% per annum for 2025-26, fixed quarterly by the Ministry of Finance.
• NPS: Returns are market-linked, typically 8–12% (historic average, not guaranteed); portfolio varies as per fund choice.

Rates are reviewed annually for EPF and quarterly for GPF. NPS does not have a guaranteed interest, but past performance in government sector schemes has often matched or exceeded 8% per annum.

Withdrawal & Retirement Rules

EPF

• Full withdrawal allowed at superannuation (58 years) or after two months' unemployment.
• Partial withdrawals for marriage, education, illness, housing, etc. (conditional caps apply).
• Premature withdrawal (< 5 years service) taxable; after 5 years, tax-free.

GPF

• Final withdrawal possible on retirement, resignation, or death.
• Partial advances or withdrawals allowed for housing, education, illness, or marriage.
• Separate rules for advances and temporary withdrawals; approval needed from competent authority.

NPS

• 60% of corpus can be withdrawn lump sum at age 60; 40% must be used to buy an annuity.
• Partial withdrawals (up to 25% of own contributions) allowed after 3 years for specific needs.
• Premature exit allowed after 10 years (with some restrictions on corpus usage).

Tax Implications on Provident Fund

• EPF: Employee's contribution qualifies for Section 80C deduction up to ₹1.5 lakh/year. Final withdrawal and interest are tax-free if account is held for at least 5 years.
• GPF: Entire withdrawal (principal and interest) tax free. Section 80C benefit available.
• NPS: Employee contributions eligible for Section 80C and an extra ₹50,000 under Section 80CCD(1B). At maturity, 60% of corpus is tax-free, 40% (annuity) is taxable as income per the individual's slab.

Note: New income tax regimes and annual Budget updates may modify benefits. Check with a financial advisor or current rules.

Difference between GPF, EPF, and NPS

For hands-on calculations, try our Provident Fund Calculator.