Summary

The central part of the Indian Social Security system is the Employee-provident fund (EPF) which is primarily designed to deliver benefits that can be withdrawn at retirement age or in a limited range of other circumstances. The EPF is essentially a mandatory personal savings scheme.

Details

Contributions

Employer and Employee are each required to pay contributions at a rate of 12%. The entire employee share goes to EPF, while the employer’s share is split, with 3.67% going to EPF and 8.33% to the Employees' Pension Scheme (EPS). The maximum earnings on which contributions are payable is approximately $165 per month. Employers also have to pay an additional 1% charge to cover the EPF’s administrative costs plus insurance. For ‘International Workers’ there is no cap on the income subject to these contribution rates.

Treaties

India has a growing network of social security agreements which prevents provident fund contributions being levied. At the moment there are 20 agreements, including Canada, Australia, Germany and Japan. Most agreements provide for up to five years of continued home country contributions. The UK and India signed a social security agreement in February 2026, allowing for 3 years of continued home country coverage, and this is likely to come into force in the first half of 2026. While an agreement has been agreed with the US, it has never been ratified. Assignees to India from the US are therefore subject to employer and employee contributions both at home and in India.

Exemptions

Participation in EPF is mandatory for cross-border workers. A foreign national qualifies as an ‘International Worker’, and is therefore liable to pay contributions, if he is coming to work for an establishment in India which has more than 20 employees. Smaller enterprises may therefore be exempt from contributions.

Administration

EPF registration can be done by employers online (practically speaking, for inbounds this would be done by the host Indian entity where the expatriate works) and the process of paying over contributions is administratively simple.

Benefits

Aside from retirement benefits, EPF savings can be withdrawn in cases of hospitalization, marriage and for some housing needs. Contributions to the EPF fund grow at a fixed rate of interest, currently 8.25%.

Other

Under the Old Tax regime, contributions to the Provident fund are tax deductible upto INR 150,000 per year (approx. $1,750). Under the New Tax Regime, employees do not get tax deductions on PF contributions, but may benefit from lower tax rates.

Foreign nationals from social security agreement countries are eligible to withdraw their accumulated PF contributions on departure from India. Foreign nationals from non-agreement countries can only withdraw these contributions at the age of 58. Withdrawals can only be made to Indian bank accounts, which adds huge complexity to the process of getting contributions refunded. 

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