EPF is a retirement benefits scheme under the Employees Provident Fund and Miscellaneous Act, 1952, where an employee has to pay a certain contribution towards the scheme and an equal contribution is paid by the employer as well on a month on month basis.
The Scheme is managed by Employee Provident Fund Organization (EPFO).
The employee gets a lump sum amount including self and employer’s contribution with interest on both, on retirement and during the service period (under certain circumstances as stipulated).
The principal amount and the accrued interest are exempt from income tax during withdrawal and thus an attractive retirement plan for the salaried class.
The Scheme covers all entities in which 20 or more employees are employed and certain entities are covered, subject to certain conditions and exemptions even if the required 20 staff criteria are not met.
EPF Interest Rate 2024
The EPF Interest Rate for 2024 is fixed at 8.25%. This rate is valid for all EPF contribution made from 1st April 2023 to 31st March 2024. The EPF interest is calculated monthly on the EPF contributions but deposited into the EPF account only on 31st March of the applicable financial year. Thus, the total interest for the year will be credited at the end of the financial year. Interest for the FY 2023-24 is 8.25%. Hence, for every month interest calculation, the interest rate will be considered as 0.688%, i.e. 8.25%/12.
An EPF account becomes inoperative or dormant if EPF contributions are not made into an EPF account for a continuous 36 months. EPF interest will be credited to the employees’ accounts until they become inoperative or dormant. However, interest will not be credited to the inactive EPF accounts.
Current & Historical EPF Interest Rates
The Interest rate of EPF is reviewed every year after consultation with the Ministry of Finance by EPFO’s Central Board of Trustees. The PF interest rate of 2024 is fixed at 8.25%. Provident fund Interest rates for the last five years are mentioned below:
| Year | EPF Interest Rate |
| 2016-17 | 8.65% |
| 2017-18 | 8.55% |
| 2018-19 | 8.65% |
| 2019-20 | 8.65% |
| 2020-2021 | 8.55% |
| 2021-2022 | 8.55% |
| 2022-2023 | 8.15% |
EPF Interest Rates 2023-24
The interest rate on EPF is reviewed on a yearly basis. The EPF interest rate for the fiscal year 2023-24 is 8.15%. When the EPFO announces the interest rate for a fiscal year and the year closes, the interest rate is computed for the month-by-month closing balance and then for the entire year.
The year in which the new interest rates are published remains valid for the following fiscal year, i.e. from the year beginning on April 1st of one year to the year ending on March 31st of the following year.
Here are a few key points to remember about EPF Interest Rate:
- The interest rate of 8.15% has come into effect and will be applicable to EPF deposits.
- Even though the interest is calculated monthly, it is only deposited to the Employees’ Provident Fund account once a year on March 31st of the applicable fiscal year.
- The transferred interest is added to the next month’s balance, i.e. April’s balance, and is then used to calculate interest.
- If no contributions are made to an EPF account for 36 months in a row, the account becomes dormant or inoperative.
- Employees who have not reached retirement age might earn interest on their inactive accounts.
- Interest is not paid on funds put in retired employees’ inactive accounts.
- The interest collected on dormant accounts is taxed at the member’s slab rate.
- The employee will not receive any interest for payments made by the company to the Employees’ Pension Scheme. However, beyond the age of 58, a pension is provided out of this amount.
EPF Contribution Rate
- Employee contribution to EPF: 12% of salary.
- Employer contribution to EPF: 3.67% of salary.
- Employer contribution to EPS: 8.33% of salary subject to a ceiling of Rs. 15,000 salary, i.e. Rs. 1,250.
Details Required to Calculate EPF Interest Rate
- The current age of an employee.
- Current EPF balance.
- Monthly basic and dearness allowance of up to a maximum of Rs.15,000.
- Percentage of contribution to EPF.
- Retirement age.
Calculation of EPF Interest
The employee’s contribution is 12% of basic salary + dearness allowance, while the employer’s 12% contribution is divided into two parts – 8.33% towards EPS account upto a maximum of Rs 1,250 per month and balance amount is transferred to the EPF account.
For example, if an employee’s basic salary + dearness allowance is Rs. 50,000:
- Employee contribution to EPF (12% of Rs. 50,000): Rs. 6,000.
- Employer contribution to EPS (8.33% of Rs. 15,000): Rs. 1,250.
- Employer contribution to EPF (6,000 – 1,250): Rs. 4,750.
The total EPF contribution for a month will be ( Rs. 6,000 + Rs. 4750): Rs. 10,750.
Total EPF contribution in the above case for the first month of joining the service = Rs. 10,750.
Interest Rate: 8.25% / 12 months = 0.688%
Interest on the EPF contribution for the 1st month = Nil
EPF account balance at the end of 1st month = Rs. 10,750
EPF contribution in the 2nd month = Rs. 10,750
Total amount accumulated in the 2nd month of service=Rs. 21,500
Interest accrued on the EPF contribution in the 2nd month = Rs. 21,500 * 0.688%= Rs.147.92
Total EPF contribution balance at the end of 2nd month = Rs. 21,500
EPF contribution in 3rd month= Rs. 10,750
Total amount accumulated in 3rd month= Rs. 32,250
Interest on the EPF contribution as on 2nd month= Rs. 32,250 * 0.688% = Rs.221.88
Total EPF contribution balance at the end of 3rd month= Rs. 32,250
FAQs
What are the Withdrawal permissions from EPF amount including epf interest under the rule?
In normal circumstances, an employee is able to withdraw the principal amount including the accrued interest upon retirement. However, anyone over 54 years of age is permitted to withdraw 90% of the accumulated balance. If an individual is out of employment for 60 days or more, the employee is entitled to withdraw the entire accumulated balance on that date.
Can you avail advances against your EPF balance?
The contribution to the scheme is meant to take care of the post-retirement needs however one does not have to wait until retirement to avail financial assistance to meet certain obligations. These advances are allowed only upon certain situations like buying a house, repaying a home loan, education or marriage of children etc. Unlike a loan, it is not necessary to repay the advances availed.