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Retirement
Tax-free after five years, 8.25% for FY 2025-26, and the EPS formula at 58.
The Employees' Provident Fund is most people's first retirement corpus, and its rules decide both when the money is tax-free and whether a pension exists at 58. This guide covers the FY 2025-26 interest rate, the five-year withdrawal rule, the advances the scheme allows before retirement, and the EPS pension formula that turns service years into a monthly amount.
EPFO's Central Board set 8.25% interest for FY 2025-26 at its 239th meeting. Withdraw the full balance after five years of continuous service and the proceeds are tax-free; resign earlier and the withdrawal is taxable (with relief under section 89 where it applies). Interest on an employee's own yearly contribution above ₹2.5 lakh — ₹5 lakh in schemes with no employer contribution — is taxable as it accrues, a rule aimed at very large balances.
Ten years of eligible service earns a pension from age 58 under the Employees' Pension Scheme 1995. The member pension is pensionable salary — the average of the last 60 months' salary on which contributions were made — multiplied by eligible service and divided by 70. EPS has its own 8.33% share of salary (capped at the statutory pensionable-salary ceiling) flowing into it, which is why a long service record matters more than a late-career salary jump beyond the ceiling.
The EPF Scheme 1952 allows non-refundable advances for specific needs: illness (para 68-J, up to six months' basic wages or your own share with interest, whichever is less), marriage or education (para 68-K, after seven years of membership, up to 50% of your own share) and housing (para 68-BD, after three years of membership, once, up to 90% of both shares with interest). Each advance reduces the corpus that later compounds for retirement, so treat them as the emergency lane they are.
Continuity matters twice over: it protects the five-year tax-free status and it keeps the EPS service record accumulating toward the ten-year pension threshold. Transferring the balance to the new employer's account (or the UAN) preserves both; withdrawing restarts the clock.
Project your EPF balance to 58 →
The withdrawal of accumulated balance after five years of continuous service is not taxable. Two wrinkles: interest credited on your own yearly contribution above ₹2.5 lakh (₹5 lakh with no employer contribution) is taxable as it accrues, and short service means the withdrawal is taxable with possible relief under section 89.
Member pension = pensionable salary × eligible service ÷ 70, where pensionable salary is the average of the last 60 months of pensionable pay. Ten years of eligible service is required for a pension from age 58; shorter service gets a withdrawal benefit instead.
8.25% for FY 2025-26, set at the Central Board of Trustees' 239th meeting. Rates are announced yearly after the CBT meeting; the EPFO and PIB releases are the authority, and this page records the rate as of its review date.
Reviewed 24 Sept 2026. Rates are notified quarterly and rules change — PFRDA, EPFO, India Post and the Department of Economic Affairs are the authority, and this hub links straight to them.