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 2022-23, the interest rate notified is 8.15%.
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 2022-23 is fixed at 8.15%. This rate is valid for all deposits made from 1st April 2022 to 31st March 2023.
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 2022-23 is 8.15%. Hence, for every month interest calculation, the interest rate will be considered as 0.679%, i.e. 8.15%/12.
Calculation of EPF Interest
Total EPF contribution in the above case for the first month of joining the service = Rs. 10,750
Interest Rate: 8.15% / 12 months = 0.679%
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 * 0.679%= Rs.145.985
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 * 0.679% = Rs.218.997
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.
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 Year | Rate of Interest p.a. |
| 2022-2023 | 8.15% |
| 2021-2022 | 8.10% |
| 2020-2021 | 8.50% |
| 2019-2020 | 8.50% |
| 2018-2019 | 8.65% |
| 2017-2018 | 8.55% |
| 2016-2017 | 8.65% |
| 2015-2016 | 8.80% |
| 2013-2015 | 8.75% |
| 2012-2013 | 8.50% |
| 2011-2012 | 8.25% |
| 2010-2011 | 9.50% |
| 2005-2006 to 2009-2010 | 8.50% |
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 2022-23 at 8.15%.
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 2022-23 the interest rate declared is 8.15%.
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 is 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 the 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 the updation of interest in your passbook. Updating of 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.
Will I face a loss if I withdraw the EPF balance when there is a delay in the updation of EPF interest in my passbook?
No, when you withdraw your EPF amount before the interest is updated in your passbook, the interest due will be calculated at the time of your claim settlement and paid from the date it becomes due automatically by the system. Hence, there is no financial loss to you in case you withdraw your EPF when there is a delay in the updation of EPF interest in your passbook.
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