Employee Provident Fund or EPF has been popular among salaried individuals for a long time now. It is a preferable post-retirement scheme under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952. Government reviews the EPF interest rate annually. The current EPF interest rate stands at 8.1%.
The following table will give you get an idea of the diversity or stability of EPF interest rates over the years:
|Financial Year||Annual Interest Rate (%)|
|2000-01||12% (April-June), 11% from July 2001|
The following illustration will help you understand the calculation of EPF interest rate:
Suppose the employee’s basic salary is Rs. 45,000 and the person joined the organisation in April 2022. The calculation for EPF interest will be as follows:
|Contribution||Percentage of salary||Amount|
|EPF by employee||12||Rs. 5,400|
|EPS by employer||3.67||Rs. 1,651|
|EPF by employer||8.33||Rs. 2,498*|
|Total contribution per month||Rs. 9,549|
*Note: As discussed before, if the salary exceeds Rs. 15,000, then Rs. 1,250 is transferred to the EPS account. So, 8.33% of Rs. 45,000 was Rs. 3,748, and after deducting Rs. 1250, the rest was transferred to the EPF account.
The current interest rate is 8.1%. So, an interest rate of 0.00675% will be levied on a monthly basis.
Let’s check it out in detail.
Also read: Difference Between EPF And EPS
Refer to the table below to get an idea of how EPF interest is calculated in a financial year:
|Months||Basic Salary + Dearness Allowance (Rs.)||Employer’s Contribution (Rs.)||Employee’s Contribution (Rs.)||Total Balance at the End of the Month (Rs.)||Interest Earned (Rs.)|
You can also use an EPF or PF calculator to check your accumulated wealth by the time you retire due to EPF contribution. All you need to do is fill in the following details – your age, basic monthly salary, contribution towards PF (in %), your employer’s contribution towards PF (in %), expected average annual increase in salary (in %), age when you intend to retire, and interest rate. Upon completion, you would be able to check the amount you could accumulate during retirement.
You need to satisfy the following criteria to be eligible to enjoy EPF benefits:
EPF account holders are eligible for tax deduction under Section 80C of the Income Tax Act, 1961. The maximum amount available for tax benefits in an EPF account is Rs. 1 lakh. Also, if you have contributed to an EPF account for five consecutive years, the amount saved up to this time will be exempted from tax. But, if the duration of your EPF account is less than 5 years, the amount accumulated will be subject to TDS deduction upon withdrawal.
If an employee’s salary is not more than Rs. 15,000, then the following breakup of contribution from salary is maintained:
This section will show you the contribution break up if the salary exceeds Rs. 15,000.
As these schemes’ benefits are provided and looked after by the employer, most of us do not bother to know about them in detail. But it is important to be aware of the current EPF interest rate and have a clear knowledge of these calculations.
Ans: Employees’ Provident Fund Organisation under the Ministry of Labour and Employment, Government of India maintains or regulates the EPF rules.
Ans: When there is no contribution in an EPF account for 36 consecutive months, the account does not get any more interest. This usually happens when an employee forgets to transfer their EPF account in the event of job transfer. Also, after an employee attains 58 years of age, the amount in the EPF account stops getting any interest.
Ans: One will need to enter the following details in the EPF calculator:
Age of employee
Age of retirement
Available EPF balance
Monthly basic salary and dearness allowance
Monthly EPF contribution
Expected salary hike
Ans: UAN or Universal Account Number is a unique number provided to every employee by EPFO. It is used by the employer to manage their PF account. One can also transfer and withdraw funds by logging in to the UAN portal.
Ans: If you have doubts or problems regarding PF, you can contact EPFO customer care on 1800118005 (toll-free). You can also visit the EPFO office at the following address:
Bhavishya Nidhi Bhavan
14, Bhikaji Cama Place
New Delhi – 110066
Before you go…
Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.