EPF Interest Rate 2024: How to Calculate the Interest Rate of EPF Contribution

By Mayashree Acharya

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Updated on: May 13th, 2024

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6 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 2023-24, the interest rate notified is 8.25%.

Union Budget 2023 Outcome 
The TDS rate has been reduced from 30% to 20% on taxable withdrawal of EPF for individuals who do not posses PAN.

EPF Interest Rate 2023

The EPF Interest Rate for 2023-24 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. 

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 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.

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 

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.

Note: 

  • 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.

EPF Interest Rates for the Last 15 Years

Financial YearRate of Interest p.a.
2023-20248.25%
2022-20238.15%
2021-20228.10%
2020-20218.50%
2019-2020 to 2020-20218.50%
2018-20198.65%
2017-20188.55%
2016-20178.65%
2015-20168.80%
2013-2014 to 2014-20158.75%
2012-20138.50%
2011-20128.25%
2010-20119.50%
2005-2006 to 2009-20108.50%

Taxation on EPF Interest

An employee’s contribution to the EPF account above Rs. 2.5 lakh in a financial year is taxable in the hands of the employee. The interest accumulated for above Rs. 2.5 lakh contributions is also subject to TDS. However, the interest accumulated on EPF contibutions within Rs. 2.5 lakh are tax-free. The interest collected on dormant accounts is taxable in the hands of the member.

Employees can claim tax deductions on EPF contributions up to Rs. 1.5 lakh under Section 80C of the Indian Income Tax Act, 1961. In addition, there will be no tax deduction on EPF partial withdrawal when the PF funds are withdrawn after 5 years of continuous contribution to the account. 

Related Articles

PF calculator 
Online Withdrawal of EPF 
Employees’ Provident Fund Organisation (EPFO)

Frequently Asked Questions

Is EPF interest credited monthly or yearly?

The EPF contribution is credited to the EPF account every month, and interest is computed monthly. However, the total interest for the entire financial year will be credited at the end of the financial year.

Is the EPF interest rate fixed or variable?

The EPF interest rates are fixed by the government. The government revises the interest rate from time to time. Currently, the government has fixed the EPF interest rate for the financial year 2023-24 at 8.25%.

What is the method of crediting EPF interest to the subscribers?

The compound interest is credited monthly at the statutory rate declared by the government for each year. For 2023-24, the interest rate declared is 8.25%.

Will EPF interest be credited to my account even when there is no EPF contribution?

Yes, EPF interest will be credited to an account even when there has been no contribution for 3 years. Thus, if your EPF account has no contribution due to unemployment or Non-Resident Indian (NRI) status, you will get interest for 3 consecutive years from the stopping of contribution.

Till what time will I get EPF interest in my account?

You will get EPF interest for up to 3 years after retirement. After 3 years of no contribution to your EPF account, it becomes inoperative and will not earn any interest.

Will I face a loss when there is a delay in the updation of EPF interest in my passbook?

No, you will not suffer any financial loss if there is a delay in updating the interest in your passbook. Updating the member passbook with EPF interest is an entry process. The date on which the EPF interest is entered in the member passbook has no financial bearing as the interest earned for the year is added to the closing balance of that year, and it becomes the opening balance for the next year.

About the Author

I am an advocate by profession and have a keen interest in writing. I write articles in various categories, from legal, business, personal finance, and investments to government schemes. I put words in a simplified manner and write easy-to-understand articles. Read more

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Quick Summary

Employee Provident Fund (EPF) acts as a retirement benefits scheme for employed individuals, with contributions from both the employee and employer. The interest rate for FY 2023-24 is fixed at 8.25%, and various calculations are involved in determining EPF interest based on contributions and age. EPF accounts can become dormant after 36 months without contributions, and taxation applies to EPF interest above Rs. 2.5 lakh.

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