EPF is deducted automatically from most salaried employees' pay. You contribute 12% of your basic salary plus dearness allowance, and your employer contributes a matching amount, part of which goes to a linked pension scheme.
The balance earns interest set by the government each year — around 8.25% recently — compounded annually and largely tax-free if you stay invested for at least five years.
For example, if your basic salary is ₹40,000, roughly ₹4,800 from you and a similar amount from your employer flows into EPF each month. Over a full career this becomes one of the largest parts of most people's retirement savings, and it also counts toward your Section 80C deduction.