Where does my PF contribution actually go?

Why the two halves do not match

You and your employer each pay 12 percent of basic plus DA. The difference is what happens next. Your 12 percent goes straight into the provident fund. Out of the employer 12 percent, 8.33 percent of wages up to ₹15,000 a month is taken first for the Employees Pension Scheme, and only what is left reaches your provident fund balance.

That is why the employer column in your passbook is consistently smaller than yours, and why people who assume their EPF grows at 24 percent of basic end up with a projection well above what actually arrives.

What the wage ceiling does

The pension share is capped at 8.33 percent of ₹15,000, whatever you earn. Once basic plus DA passes the ceiling, the amount going to EPS stops moving and every further rupee of the employer share goes to EPF instead. So a rising salary grows your provident fund quickly and your pension contribution not at all.

The consequence shows up decades later, in the pension formula rather than here. Our EPS pension estimate works out what that produces each month, and it is usually a good deal less than people expect.

What people get wrong about this

The most common error is using CTC instead of basic plus DA. Basic is often only 40 to 50 percent of CTC, so a calculation run on the full figure roughly doubles the answer.

The second is treating the employer contribution as an addition to take-home pay that simply went elsewhere. Part of it did not go to your provident fund at all: it went to the pension scheme, where it buys a formula-based entitlement rather than a balance you can withdraw.

To project the balance rather than the monthly split, use the EPF corpus projection.