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EPF Interest Rate 2022 – How to Calculate the Interest Rate of EPF Contribution

Updated on :  

08 min read.

Employee Provident Fund (EPF) is a retirement benefits scheme framed under the Employees Provident Fund & Miscellaneous Provisions Act, 1952. The scheme applies to those who are employed. As per the EPF scheme, the employer deducts a certain amount of contribution from the employee’s salary and deposits in his or her EPF account. An employer also contributes to the employee’s EPF account.

On retirement, the employee receives a lump sum corpus of EPF, including the employee’s contribution, employer’s contribution and the interest amount credited every year. The government reviews the interest rate on EPF accounts regularly. For the FY 2019-20, the interest rate notified is 8.5%. 

Union Budget 2021 Outcome
In case the employee’s PF contribution was deducted but not deposited by the employer, it will not be allowed as a deduction for the employer.

The government has decided to retain the EPF interest rate of 8.% for the financial year 2021-22.

Contribution Rate for Employee’s Salary up to Rs.15,000

  • 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.

Breakup of Contribution if Salary is above Rs. 15,000

If an employee’s salary is Rs.15,000 or more, the employer’s 12% contribution is divided into two parts.

8.33% of Rs 15,000 goes to EPS account. i.e. Rs 1,250 per month, and balance

Amount exceeding Rs 1,250 per month 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 EPF (3.67% of Rs.50,000): Rs. 1,835.
  • Employer contribution to EPS: Rs. 1,250.

Since 8.33% of Rs.50,000 is Rs. 4,165, Rs.1,250 is transferred to the EPS account, and the balance of Rs.2,915 is transferred to the EPF account.

The total balance in the EPF account is Rs. 10,750.
(i.e. employee contribution of Rs.6,000 + employer contribution of Rs.1,835 and excess contribution of employer towards EPS Rs .2,915.)

Details Required to Calculate EPF Interest Rate

The following details are required to calculate EPF interest:

  • 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.

The EPF contribution is credited to the EPF account on a monthly basis, and interest is computed every month. However, the total interest for the year will be credited at the end of the financial year. Interest for the FY 2019-20 is 8.5%. Hence, for every month interest calculation, the interest rate will be considered as 0.708%, i.e. 8.5%/12.

Calculation of EPF Interest

Total EPF contribution in the above case for the first month of joining the service = Rs. 10,750

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 * 0.007083%= Rs.152

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 * 0.007083% = Rs.228
Total EPF contribution balance at the end of 3rd month= Rs. 32,250

A similar calculation is done for all other months of the year.

The total EPF balance at the end of the year will be the sum of the employer contribution, employee contribution, and monthly interest accrued during the year.

Also, the closing balance of the EPF account in the first year will be the opening balance for the second year. And EPF interest for the second year will be calculated, including the opening balance carried forward from the previous year.

To calculate your EPF fund after retirement, go to the EPF calculator.


  • Salary means basic salary plus dearness allowance.
  • If the entity is a designated entity or has less than 20 employees, a lower contribution of 10% of wages is required.

Contribution to EPF by the employer if employee’s salary exceeds Rs 15,000

An employer can opt for one of the following methods if the employee’s salary is more than Rs 15,000:

  • The employer can restrict his contribution to 12% of employees basic salary and dearness allowance, or
  • he can match the contribution of the employee if salary is more than Rs. 15,000.

EPF Interest Rates for the Last 15 Years

Financial YearRate of Interest p.a.
2005-2006 to 2009-20108.50%

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