Two numbers explain most of the difference between your salary and what reaches your account: your retirement contribution and your tax. Both are worked out on your basic salary, not your total pay, and which scheme you are in — the Provident Fund (EPF) or the Social Security Fund (SSF) — changes both. Here is how each works in FY 2083/84.
The rates
All percentages are of basic salary. Allowances, overtime and bonuses don't attract these contributions.
| Scheme | You pay | Employer pays |
|---|---|---|
| Social Security Fund (SSF) | 11% | 20% — includes 10% provident fund and 8.33% gratuity |
| Employees Provident Fund (EPF) | 10% | 10%, plus 8.33% gratuity set aside separately |
| Contribution-based pension (civil servants from 2076) | 6% | 6% (government) |
| Citizen Investment Trust (CIT) | Voluntary, any amount | — |
Where SSF's 31% goes
The 11% you pay and the 20% your employer pays go into four schemes: 28.33% to old-age protection (provident fund, additional provident fund and gratuity), 1% to medical, health and maternity, 1.4% to accident and disability, and 0.27% to dependent family protection.
So SSF isn't extra money on top of provident fund and gratuity — it replaces them and adds insurance-style cover. By law, formal-sector employers must enrol staff in the SSF, though not every employer has moved over yet.
How it changes your tax
- SSF members don't pay the 1% social security tax on the first Rs 10 lakh of taxable income. Provident Fund or CIT alone doesn't waive it.
- Your employer's contribution counts as part of your income, and then the combined contributions (yours, your employer's and CIT) are deducted — up to one-third of your income or Rs 5 lakh a year, whichever is lower.
- CIT is a common way to use more of that Rs 5 lakh limit and lower your tax, at the cost of locking the money away.
Worked examples
Monthly figures for a basic salary with no other allowances, on the FY 2083/84 rules. They come from the same calculator linked below.
| Basic salary / scheme | Your contribution | Tax (TDS) |
|---|---|---|
| Rs 50,000 · SSF | Rs 5,500 | Rs 0 → take-home Rs 44,500 |
| Rs 50,000 · Provident Fund | Rs 5,000 | Rs 450 → take-home Rs 44,550 |
| Rs 50,000 · none | Rs 0 | Rs 500 → take-home Rs 49,500 |
| Rs 1,20,000 · SSF | Rs 13,200 | Rs 2,347 → take-home Rs 1,04,453 |
| Rs 1,20,000 · Provident Fund | Rs 12,000 | Rs 3,300 → take-home Rs 1,04,700 |