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EPF Interest Rate

EPF Interest Rate

The EPF interest rate of India is decided by the central government with the consultation of Central Board of trustees. In the past several decades, the interest rate has ranged from 8-12 % of the balances maintained in the fund. The EPF interest rate notification is available on the official website of EPF India on an annual basis. The same is communicated through major dailies in all cities.

Apart from the EPF interest rate payable to the employees, the EPF charges the employers penal interest for not depositing the employee and employer contribution and charges on time. Penal interest rates range from 17% to 37% depending on the graveness of the issue.

EPF Interest Calculation

The calculation of the EPF interest rate of India is different from other countries. The employer and the employees need to contribute to the EPF from the monthly basic salary plus the dearness allowance. The employee contribution is 12% of the above mentioned salary structure and the employer contribution is 13.61 % of the employees’ salary.

The Distribution of Funds is As Per Below:

  • Total contribution to EPF – 12%
  • Employer Contribution to EPF – 3.67%
  • Employee Contribution to EPF – 12%-3.67%
  • Employer Contribution to Pension Fund – 8.33%
  • Employer Contribution to EDLI (Employees Deposit Link Insurance) – 0.50 %
  • Employer Contribution to Admin Charges - 1.10%
  • Employer Contribution to Admin charges on EDLI a/c  - 0.01%

Interest is calculated on a monthly basis for the period of investment during the year at the rate of interest specified by the government. This interest is added to the investment in the EPF of the account holder.

Example if the basic salary for EPF calculation is Rs. 2000, then the EPF interest rate calculation for the 1st month will be (assuming 9% EPF interest rate) 2000x9%/12months*12months = rs.180

Similarly, the next month the calculation will be: 2000x9%/12months*11months = rs.165

Download DMCC Software for EPF Interset Rate Calculation Click Here

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