EPF and gratuity explained

Two chunks of your CTC quietly disappear from your monthly in-hand: EPF and gratuity. They feel like deductions, but both are savings that belong to you.

EPF (Employees' Provident Fund)

EPF is a retirement savings scheme. Both you and your employer contribute 12% of your basic salary each month:

• Employee PF (12% of basic) — deducted from your salary, so it lowers your in-hand.
• Employer PF (12% of basic) — part of your CTC, paid on top; also never reaches your account as cash.

Many employers cap PF at the statutory wage ceiling of ₹15,000/month, i.e. ₹1,800/month each. Others compute it on your actual basic — this is a key toggle in the calculator. EPF currently earns a government-declared interest rate (around 8%) and is largely tax-free, making it one of the better forced-savings vehicles.

Gratuity

Gratuity is a lump sum paid when you leave after 5 years of service (payable per the Payment of Gratuity Act). In CTC it is accrued at roughly 4.81% of basic per year. It's part of your CTC but you only receive it on exit, so it never appears in monthly in-hand.

Why they matter

Together, EPF and gratuity can be 10–15% of a fixed-heavy CTC. That's why your in-hand looks smaller than expected — but it's building a retirement corpus, not vanishing. The in-hand calculator shows your total annual EPF savings alongside your take-home so you can see the full picture.