Short answer: The Employees’ Provident Fund (EPF), run by the Employees’ Provident Fund Organisation (EPFO), is a compulsory retirement savings account for most salaried employees in establishments covered by the scheme. You and your employer each contribute a share of your basic pay, and the balance earns interest declared every year; for 2025-26 the rate was kept at 8.25%. Since late 2025, partial withdrawals have been simplified, but a quarter of your balance must stay invested.
Last updated: 13 October 2026.
This hub covers how EPF works, the current withdrawal rules, tax points under the Income-tax Act, 2025, and how to decide between using your PF and taking a loan.
How EPF works
- Employee contribution: 12% of basic pay plus dearness allowance goes to your EPF account.
- Employer contribution: also 12%, but part of it goes to the Employees’ Pension Scheme (EPS) rather than your EPF balance.
- UAN: your Universal Account Number stays the same across jobs, so all your PF accounts can be linked to one identity.
- Interest: declared yearly by EPFO’s Central Board of Trustees and credited to your account. It was 8.25% for both 2024-25 and 2025-26.
- Insurance: members are also covered under the Employees’ Deposit Linked Insurance (EDLI) scheme, which pays the nominee if the member dies while in service.
Your UAN must be linked with Aadhaar, PAN and your bank account for claims to go through smoothly. See linking EPF with Aadhaar and our Aadhaar hub for KYC help. Member services and forms are on the EPFO’s page for employees.
Partial withdrawals: the simplified rules
In October 2025, EPFO’s board approved a major simplification. The earlier list of 13 separate withdrawal purposes was merged into three groups, and the main changes reported were:
| Area | Before | After the 2025 change |
|---|---|---|
| Withdrawal purposes | 13 separate rules | 3 groups: essential needs (illness, education, marriage), housing, special circumstances |
| Minimum service | Varied by purpose | 12 months for all purposes |
| How much | Different caps by purpose | Up to 100% of the eligible balance, including the employer share |
| Minimum balance | None | 25% of contributions must stay in the account |
| Education and marriage | Combined limit of 3 withdrawals | Up to 10 for education and 5 for marriage |
| Special circumstances | Had to state a reason such as lockout or calamity | No reason needs to be stated |
Rules on final settlement were also changed: the waiting period for premature full EPF withdrawal after leaving a job was reported as extended from 2 months to 12 months, and for pension withdrawal to 36 months. Check the claim form on the EPFO portal before applying, because operational details can change. For step-by-step help, read types of EPFO withdrawals and how to withdraw your provident fund.
Tax on EPF under the Income-tax Act, 2025
The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026, so many familiar section numbers have changed. The main points for EPF:
- Your contribution: the deduction formerly under section 80C now sits in section 123 of the Income-tax Act, 2025, with an overall limit of ₹1,50,000. It is available only if you choose the old tax regime.
- Withdrawals: generally tax-free after five years of continuous service (service with earlier employers counts if the PF was transferred). Withdrawals before five years can be taxable and may attract TDS.
- Interest on large contributions: interest on employee contributions above a yearly threshold is taxable each year.
For the bigger picture, see our income tax hub for salaried borrowers.
PF withdrawal or a loan?
Taking money out of EPF has no EMI, but it has a real cost: the money stops compounding at a relatively high, low-risk rate.
Worked example
Priya is 35 and needs ₹2,00,000 for a family medical bill. If she withdraws it from EPF, and the rate stays near 8.25%, that ₹2,00,000 would have grown to roughly ₹14.5 lakh by age 60. A two-year personal loan of the same amount would cost interest instead, but leave her retirement savings intact. (Priya is an illustrative example.)
| Factor | EPF partial withdrawal | Personal loan |
|---|---|---|
| Cost | Lost future compounding | Interest and fees (see APR in the KFS) |
| Speed | Online claim, usually days | Hours to days for digital loans |
| Credit check | None | Yes |
| Repayment | None | Fixed EMIs |
If you are weighing the two, use our EMI calculator and read about medical loans and emergency loans. Building an emergency fund outside EPF means you are less likely to need either.
Need funds without breaking your PF? Compare personal loan offers from RBI-regulated lenders before you decide.
Related guides
Frequently asked questions
What is the EPF interest rate for 2025-26?
EPFO kept the rate at 8.25% for 2025-26, the same as 2024-25. Interest is credited to member accounts after the government ratifies the rate.
How much of my PF can I withdraw now?
Under the rules approved in October 2025, up to 100% of the eligible balance can be withdrawn for permitted purposes, but 25% of contributions must remain in the account. A minimum of 12 months’ service applies.
Is EPF withdrawal taxable?
Generally not after five years of continuous service. Earlier withdrawals may be taxable and TDS can apply, especially if PAN is not linked.
Do I lose my PF when I change jobs?
No. Your UAN stays the same; link the new employer’s member ID and transfer the old balance online so your service is treated as continuous.
Can I take a loan against my PF?
EPF does not offer a loan; it offers withdrawals, which you do not repay. If you want to keep your retirement savings intact, a separate loan is the alternative.
Sources
Disclosure: FundsTiger (Gatimaan Finance Advisors Pvt. Ltd.) is a loan marketplace and lending service provider for RBI-regulated lenders. Aparampaar Finance Pvt. Ltd. (Omozing), one of those lenders, is a related party of FundsTiger. This article is general information, not financial advice. Read your loan agreement and KFS before you decide.