Categories: Fixed Income (FD,RD,PF..)

EPF a/c interest calculation : Components & illustration (Employees’ Provident Fund)

Are you a salaried Employee? Do you contribute a portion of your monthly salary towards Employees’ Provident Fund (EPF)? Are you aware that your employer also contributes a matching amount towards your EPF account? Do you know about the various components of your employer’s PF contribution? Are you aware of ‘how interest is calculated on your monthly subscriptions to Provident Fund?

I was in need of the EPF statement to resolve all the above queries and answer them in a simple and easy to understand manner. Since I am a self employed individual, I can’t contribute to Employees provident Fund and do not have online access to EPF UAN (Universal Account Number) member portal. (You can view or download your EPF statement online @ EPFO’s UAN Member Portal)

Many thanks to one of my good friends for sharing his latest employees’ provident fund statement and that has helped me in preparing this post. Before analyzing the EPF statement and how EPF’s interest is calculated, let us first understand the various components of EPF.

Latest Update (Budget 2021) : Interest on EPF Contributions above Rs 2.5 lakh is Taxable | Budget 2021

What are the Components of my Employees Provident Fund (EPF account)?

If you take out your monthly pay-slip and check, you can understand that every month 12% of your “salary” is contributed towards EPF account. Your total monthly contribution is routed towards Employees’ Provident Fund.

Your employer also contributes 12% of the salary to your EPF a/c. But your employer’s monthly contribution is routed towards various components of PF.

Out of this 12% of your employer’s monthly contribution, 8.33% goes towards EPS (Employees Pension Scheme) and only 3.67% is invested in Employees’ Provident Fund (EPF). So, you contribute 12% of your basic salary and your employer contributes 3.6% of your basic salary towards EPF deposits.

What are the new amendments made to EPF & EPS schemes?

Below are the amendments/changes made to EPFO’s EPS scheme in August 2014. (EPFO is Employees’ Provident Fund Organisation)

  • EPF a/c is mandatory if your salary is less than Rs 15,000 pm. Previously this amount was limited to Rs 6,500 pm. (The definition of SALARY for EPF calculation is : Salary = Basic + Dearness Allowance)
    • Latest Update (01-Mar-2019) : As per the Supreme Court judgement, employers cannot segregate ‘special allowance’ from basic wages for purpose of PF deductions.
    • Cash allowances (dearness allowances) including but not limited to travel allowance, canteen allowance, special allowance, management allowance, conveyance allowance, education allowance, medical allowance, special holidays, night shift incentives and city compensatory allowances to employees are part of ‘basic wages’ for calculation of Provident Fund contributions.
  • As mentioned above, you contribute certain portion of your monthly salary towards EPS (Pension). You receive the pension amount from this Employees’ Pension Scheme. The minimum pension to a pension holder is now decided as Rs 1,000 pm.
  • The EPF’s account holder can nominate any family member as a nominee. On any unfortunate event (on death), the family member of the EPF subscriber will receive Rs 3 Lakh as insurance coverage. Previously this was around Rs 1.56 Lakh only. (Do not forget to inform your nominee about this provision).
  • The minimum contribution used to be 12% of Rs 6,500 in most of the employees’ cases, now this is 12% of Rs 15,000 pm. So, you may now be depositing Rs 1,800 towards EPF. Whereas, you employer may now be contributing Rs 550 pm and Rs 1,250 pm towards EPF and EPS (pension) respectively.

Kindly note that the above figures are for minimum contributions. Check your pay-slip or EPF statement to know about your employer’s and your contribution percentages.

Understanding the components/sections in EPF online Statement: Above is the latest EPF online statement (Sep 2012 to Dec 2014) that I have received from my friend. Let us understand the different sections available in EPF statement.

  • The first column (PARTICULARS) gives you the particulars of month-wise contributions, interest updated date and about the executed PF transfers/withdrawals (if any)
  • The second column has two sections which gives you information about your employer’s and your share towards EPF deposit.
  • PF Withdrawals are listed under third column.
  • Your Employer’s contributions towards your EPS (pension) is provided here.
  • With reference to the above EPF statement, you can observe that Rs 780 and Rs 239 (12% of Rs 6500 pm) used to be employer’s and Employee’s contributions towards EPF account. These are now (after September 2014) changed to Rs Rs 1,800 and Rs 550 pm respectively.
  • Employer’s contribution towards EPS account used to be Rs 541 pm and now it is Rs 1,250 (from October 2014 onwards). (Suggest you to check your statements too and understand more about the EPF and EPS contributions).
  • You can observe that my friends has changed the company and had claimed EPF transfer online. The online EPF transfer details are also available in EPF statement.
  • You can also observe that there are transactions towards “Interest updated” in the statement as on 31st March of every year. These are the interest payouts on the total monthly contributions. There won’t be any interest payout towards EPS contributions.

How is interest on EPF account is calculated?

Before explaining to you about the calculation of interest on EPF deposits, let us understand few relevant points regarding the interest calculation.

  • The rate of interest is notified by the central government periodically (every fiscal year). The rate of interest on EPF deposits for last three fiscal years are : EPF interest rate in 2012-13 was 8.5%, in 2013-14 it was 8.75% and for this fiscal year (2014-15) too it is 8.75%.
  • Interest Amount is calculated on the average monthly balance. EPF subscribers are eligible to get interest amount on their contributions and employer’s PF deposits.
  • The interest amount is calculated monthly but the total interest amount is credited once a year only. The credit payout generally happens at the end of March.
  • The accounting year followed by EPFO office is from March to February.

Let us now understand how the interest is calculated on EPF deposits. Let us consider the same EPF statement as the one given above. My friend had joined in his first job in a Private Limited company in September 2012. His company contributes 8.33% of his Basic salary as “EPF deposit” (Rs 239 pm) every month and 3.67% towards the EPS scheme (Rs 541 pm). (The 12% is subject to minimum of Rs 6,500 in 2012-13). His contribution was 12% of Rs 6,500 which was Rs 780 pm.

Let me put all these figures in MS excel and calculate the total interest earned on EPF deposits from September 2012 to end of March 2013.

Let me now explain about the calculation part. In the month of September 2012 the interest amount was zero because the available EPF balance was zero in the month of August 2012.

In Oct 2012, Rs 7.2 was the interest earned for September’s monthly contribution. We need to consider September month end balance (Rs 1019) and EPF applicable interest rate ( it is 8.5% in 2012-2014) divided by 12 months (we are calculating monthly interest amount). We need to repeat these calculations till March 2013. The total accumulated interest was Rs 152 and was credited on 31/Mar/2013 (as shown in EPF statement).

The total interest amount of Rs 152 was added to April month’s balance, along with the monthly deposits. Even after the recent amendments to minimum contribution amount, the interest calculation procedure has not changed.

So, suggest you to try these calculations based on your monthly Provident Fund deposits and understand how is interest calculated on your Provident Fund Account. (Leave your query if you need any assistance).

Latest news (March 2021) : EPF interest rate for 2020-21. The Central Board recommends 8.50 % rate of interest to its subscribers for the year 2020-21. EPFO notifies 8.5% as interest Rate on EPF for the year 2020-21.

The previous FYs EPF interest rates are as below;

  • FY 2019-20 : 8.50%
  • FY 2018-19 : 8.65%
  • FY 2017-18 : 8.55%
  • FY 2016-17 : 8.65%
  • FY 2015-16 : 8.80%
  • FY 2014-15 : 8.75%
  • FY 2013-14 : 8.75%
  • FY 2012-13 : 8.50%
Income Tax Saving Benefits on EPF contributions: Only your (employee’s) contributions towards EPF account are eligible for Income tax deduction under Section 80 C of Income Tax Act. If you have contributed for 5 years in EPF then there is no tax deduction but for less than 5 years TDS (Tax Deduction at Source) is deducted for EPF amount withdrawals. Did you like reading this article? Did you find it informative? Do share this post with your friends. If you have any queries on EPF interest calculations, kindly leave your comment. Cheers! Continue reading : (Image courtesy of adamr at FreeDigitalPhotos.net)  

This post was last modified on July 10, 2023 6:13 pm

Sreekanth Reddy

Sreekanth is the Man behind ReLakhs.com. He is an Independent Certified Financial Planner (CFP), engaged in blogging & property consultancy for the last 14 years through his firm ReLakhs Financial Services . He is not associated with any Financial product / service provider. The main aim of his blog is to "help investors take informed financial decisions." "Please note that the views given in this Blog/Comments Section/Forum are clarifications meant for reference and guidance of the readers to explore further on the topics/queries raised and take informed decisions. The information provided, therefore, should not be viewed as financial, legal, accounting, tax or investment advice."

View Comments

  • my half of money transfer to pension facility . so can i get same when i want my pf money .

  • Hi Srikanth,

    Even I haven't got interest amount credited to my EPF account. May is completed by today. Can you please let us know what's going on in EPFO office, why interest is not being credited for 2015-2016 period.

    Regards,
    Savan

    • Dear Savan..The interest rate for 2015-16 has recently been notified, so it may take sometime to get the entry in EPF passbook.

  • Hello Sir,

    I'm Srikanth reddy I have joined one organization as a HR I'm fresher to this job role Now my management has instructed me to enroll my self in PF and generate a UAN for myself and also instructed me to generate UAN of those employees who are yet to get UAN. Kindly guide in this regard. As a fresher I dont have any knowledge about PF.

  • I have served in IFFCO for 8 yrs. And left on 2013. Now I want to withdraw my EPF fund. How much can I withdraw? What are the TDS implications? Will I get interest for the last three years during which I have not contributed.

    • Dear Somanath,
      If it is more than 36 months since you made PF contributions to that PF a/c then it would have become INOPERATIVE. But as per the recent govt's notification, interest will be paid on INOPERATIVE a/cs too.
      PF withdrawal is tax-free in your case.
      If you are not employed now and not contributing to EPF scheme, you can withdraw full balance.
      Kindly read:
      New EPF withdrawal forms.
      EPF withdrawal & new TDS rules.
      EPF inoperative a/c helpdesk.

      • Thank you very much Reddy Sir..... I am now employed and not contributing to EPF but contributing to NPS. So how much can I withdraw ? Can I transfer it to my PPF account or NPS account ? What other options are available for me ?

        • Dear Somanath,
          Govt is contemplating to provide one time portability option (EPF to NPS and vice-versa), but haven't yet announced it.
          You can not transfer the funds to PPF account.
          You have the option to withdraw full balance now.

          • Thank you Sir..... Your suggestions are too much helpful to me.... Have a very nice Day....

  • My age is 41years.

    Current EPF balance = 1516630
    Basic Salary = 68852
    VPF contribution= 88% (Company = 12%)
    Salary Hike for next 20 years = 8% (average)
    EPF rate = 8.8% ( I assume for 2016)

    I would like to know what would be the corpus EPF/EPS amount when I turn 60years.

    • Dear Irshad..Your salary may appreciate at the rate of 8% but your basic salary may not be the same or may not increase in the same proportionate, EPF interest rates may vary year on year.

    • Dear Sreekanth ,

      Requesting your kind support for the above query.
      Also, for my basic, I am sure a part of the amount will only be considered for PF & the remaining will be taxed. May I know the breakup of how much will be taxed ?

      Thanks.

      • Dear Sreekanth ,

        I think the formula is wrong. If the increment is equal to the EPF rate of interest, the formula fails.
        Hence, kindly calculate (on my behalf) the corpus amount @ 60yrs for the below data. Thanks for the great support.

        Age = 41yrs
        Current EPF balance = 1516630
        Basic Salary = 68852
        VPF contribution= 88% (Company = 12%)
        Salary Hike for next 20 years = 8% (average)
        EPF rate = 8.8% ( I assume for 2016)

        • Dear Irshad,
          Kindly share the correct formula then?
          The reason I am not calculating is, this is all hypothetical and salary will not remain same and ROI will not remain same. There is no point in calculating the corpus.

          • Dear Sreekanth,

            I totally agree with you.

            But assuming that the below data remains CONSTANT, could you then give me the corpus amount @ 60yrs

            Age = 41yrs
            Current EPF balance = 1516630
            Basic Salary = 68852
            VPF contribution= 88% (Company = 12%)
            Salary Hike for next 20 years = 8% (average)
            EPF rate = 8.8% ( I assume for 2016)

  • I have also not received my PF yearly interest for period of April 2015 to March 2016.Since last 4 yrs I have received interest after march. pls reply to my query at the earliest.Thanks

  • Hi Sreekanth,

    Can you pls tell me how much amount i can withdraw from PF account.Rite now the balances am having is

    Employee Share till december'2015 is accumlated is : 109404 and

    Employer Share till december'2015 is accumlated is : 76482,

    So total in my PF account i have is : 185886

    • Dear Santosh,
      The new withdrawal rules have been cancelled.
      If you are unemployed for more than 60 days, you can withdraw full PF balance.

  • Sir I am complited my CT(company trainee) 6 months in bajaj auto ltd, chakan and my stiepend 10000/pm and in that my PF contributions is 1200/pm then how much amount is come to me provident fund (of) pleas tell me sir

  • Hi Team I m working at goldenstar company at hyderabad from fast 2 years i m working in my salary is 9679 for pf deducting 999 Rs so please how money i will cum let me Know With interest

    Thanks& Regards
    Manohar Yadav

1 … 6 7 8 9 10 … 19
Leave a Comment
Share
Published by
Sreekanth Reddy
Tags: Employees Provident FundEPF accountEPF interestEPF interest calcuationEPF interest formulaEPSInterest on EPF AccountPF interest amount calculationProvident Fund interest
July 10, 2023

Recent Posts

ITR Belated vs Revised vs ITR-U – Which One Should You Choose?

Filing your Income Tax Return (ITR) is not just about meeting deadlines—it’s about choosing the…

April 29, 2026

Best Pension Schemes in India (2026) – EPS, NPS, APY Explained

Retirement planning in India is often misunderstood. Many people think any long-term savings or investment…

April 24, 2026

Property Valuation Guide: How Your Home Is Really Valued

You’ve probably seen the same property quoted at different prices. One person says ₹60 lakh,…

April 21, 2026

Moratorium Rule in Insurance – When Can Insurers NOT Reject Your Claim?

Buying insurance is easy. Getting your claim settled—that’s where the real test begins. For any…

April 15, 2026

Immovable Property Gifts Above ₹45 Lakh Now Under SFT: What Changes from 1 April 2026?

Gifting immovable property—like land, plots, or houses—is super common in India. Families often do it…

April 11, 2026

The ETERNAL Financial Planning Framework: A Practical Approach to Building Long-Term Wealth

Most people believe that investing alone is enough to create wealth. But in reality, many…

April 9, 2026

This website uses cookies.