Employees Provident Fund Interest Rate Calculation 2022: The applicable interest rate on EPF contribution for the financial year 2021-22 is 8.10%. The Government is currently not considering any proposal to reconsider the current EPF rate.
Currently, the EPF rate is higher than other comparable schemes such as General Provident Fund (7.10%), Senior Citizens Savings Scheme (7.40%), Sukanya Samriddhi Account Scheme (7.60%).
“The CBT, EPF had recommended 8.10 per cent rate of interest on EPF for the financial year 2021-22, which has been approved by the Government and is higher than other comparable schemes viz. General Provident Fund (7.10%)/Senior Citizens Savings Scheme (7.40%)/Sukanya Samriddhi Account Scheme (7.60%). There is no proposal to reconsider the approved rate of interest (8.10%) on EPF deposits for the year 2021-2022,” the Union Minister of State for Labour and Employment Rameshwar Teli said in a written reply to a query in the Rajya Sabha on 1 August 2022.
How is the EPF rate decided?
The EPF rate is decided by the CBT on a yearly basis. The rate of interest on EPF depends on the income received by the EPF from its investments. The interest rate also has to be vetted by the finance ministry. Such incomes are distributed in accordance with the EPF Scheme, 1952.
The Employees’ Provident Fund Organisation (EPFO) is required to credit to the account of each member interest at such rate as may be determined by the Central Government in consultation with the Central Board of Trustees (CBT), Employees’ Provident Fund (EPF).
The current EPF interest rate is the lowest in the four decades. It was 8.5% in the previous year. From 2016-17, EPF rates remained at or about 8.5%. It was 8.65% in 2018-19, 8.55% in 2017-18 and 8.65% in 2016-15.
EPF interest rate calculation: Example
Suppose the total EPF contribution in a month (including employee+employer) is Rs 5000 at the beginning of the month. At the 8.1% interest rate, the total interest earned on PF contribution by the end of this month will be Rs 5000×8.1%/12 = Rs 33.75.
Under the EPF scheme, both employee and employer have to contribute 12% of Basic Salary+Dearness Allowance to towards the provident fund account. Of the employer’s share, 8.33% goes towards Employees Pension Scheme and the remaining towards PF.