The finance ministry has ratified the 8.25% interest rate on Employees’ Provident Fund (EPF) deposits for 2025-26. The interest will be credited into the accounts of over 70 million contributing members this month.
The Central Board of Trustees (CBT), the apex decision-making body of the Employees’ Provident Fund Organisation (EPFO), fixed the 8.25% interest rate for 2025-26 in March this year.
In FY24, the EPFO raised the interest rate to 8.25% from 8.15% in the previous year. The interest rate had fallen to a four-decade low of 8.1% in FY22. The retirement fund body invests 67.5% of its corpus in government securities, 20.34% in debt instruments, 1.92% in short-term debt, and nearly 10.23% in equities.
At present, the interest rate offered by EPFO is the highest among all debt-oriented products. State Bank of India is offering 6.25% for deposits of one year to less than two years, Senior Citizens Savings Scheme Account and Sukanya Samriddhi Account offer 8.2% and Public Provident Fund 7.1% per year,
The contributions in EPF get a tax deduction of up to Rs 1,50,000 a year under the old tax regime. The interest amount is exempt from tax. However, if the employees’ contribution is above Rs 2.5 lakh a year, the interest earned on the excess amount is taxable.
Earlier, the Ministry of Labour and Employment stated that despite global uncertainties, EPFO has maintained strong financial discipline, delivering stable and competitive returns without straining the interest suspense account. At an 8.25% interest rate, EPFO is estimated to face a loss of Rs 944 crore in FY26.
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