EPF interest rate- At present, the government is paying interest on EPF at the annual rate of 8.1 percent. EPF is one of the best investment tools to build a thick fund in the long term because of the good interest it offers. Along with this, a guarantee is also available from the government.
New Delhi. Lakhs of employees in the country invest in Employees Provident Fund (EPF). Both the employer and the employee have to contribute to the EPF scheme run by the Employees Provident Fund Organization (EPFO). According to the current rules, an employer who has 20 or more employees and whose salary is Rs 15,000 or less, is required to open an EPF account for his employees.
In the year 2021-22, the government is paying interest on EPF account at the rate of 8.1 percent (EPF Interest Rate). The employee has to contribute 12% of the salary made by combining his basic salary and DA in the EPF account and EPS. The employer also has to contribute the same amount. Of the employer’s contribution, 8.33 per cent goes to the EPS. The employer’s contribution to EPF is only 3.67 per cent. In this way, by adding the amount of contribution of both, you can find out how much money will be deposited in the EPF account in a year.
How to know your balance
Subscribers need not go anywhere to check EPF account balance. EPFO provides the facility to know PF balance in four ways. PF account holder can get balance information by giving missed call from registered mobile number or by SMS. Not only this, he can know how much money is lying in his PF account with the help of online Umang app and by logging on to EPFO’s website.
This is how interest is calculated
- Basic Pay + Dearness Allowance (DA) = Rs 15,000
- Employee’s contribution to EPF = 12% of Rs 15000 = Rs 1800
- Employer’s contribution to EPF = 3.67% of Rs 15,000 = 550.5
- Employer’s contribution to EPS = 8.33% of Rs 15,000 = Rs 1249.5
- Total contribution to EPF account= 1800+550.5= Rs 2350.5
- Contribution to EPF account every month = 1800+550.5 = Rs 2350.5
- This amount will be deposited in the EPF account every month and the prescribed interest rate will be credited to the account.
- According to the annual interest rate of 8.1 percent, interest will be given at the rate of 0.605 percent every month, but it will be credited on the last day of the financial year.
- Now suppose that you have joined the office in April 2022, then the amount deposited in the EPF account in April will not earn interest.
- In May 2022, you will have Rs 4701 (2350.5+2350.5) in your account and you will get 4701*0.60%= Rs 31.73 interest on it. Similarly interest can be calculated for other months.
