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Retirement

EPF withdrawal and pension (EPS)

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.

The rate and the withdrawal rule

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.

EPS: how service becomes a pension

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.

Advances before retirement

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.

Transfer, don't withdraw, between jobs

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 →

Questions on epf withdrawal and pension (eps)

Is EPF withdrawal always tax-free after five years?

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.

How is my EPS pension calculated?

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.

What is the EPF interest rate this year?

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.

Educational, not advisory — and never a projection. LetsInvest is a research publication, not a SEBI-registered investment adviser, and we run no live rates or returns feed. The withdrawal planner and corpus check are illustrations of numbers you enter. Confirm anything that matters with the scheme's own authority (PFRDA, EPFO, the post office or your fund house) before you act.

Sources

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.