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EPF Interest Rate

Current PF Interest Rate

Last Updated 31st Oct 2020

  • EPF is a retirement benefits scheme in which employees receive interest on funds deposited in the EPF accounts, contributed by both employer and employee.
  • An organisation with more than 20 employees must contribute to an EPF Account.
  • EPF Interest is calculated on compound interest on the monthly running balance and gets credited at the end of the financial year.
  • The current PF rate stands at 8.50% p.a.
  • The interest received on EPF Balance is exempted from taxes except after the retirement.

EPF Interest Rate

EPF or Employee Provident Fund is a retirement benefit saving scheme under which both employer and employee contribute equally in the EPF account at 12% each. However, amid the COVID pandemic, the EPF contribution has been reduced to 10%. Further, the employees also receive interest on the funds deposited in their EPF account, which is calculated on the monthly balance and is however credited at the end of the financial year. The EPF Interest Rate is determined by EPFO (Employee Provident Fund Organisation) in consultation with the Finance Ministry for every financial year. Presently, the PF Interest rate stands at 8.50%. p.a.

Current & Historical EPF Interest Rates

Financial Year EPF Interest Rates
2019-2020 8.5% p.a
2018-2019 8.65% p.a
2017-2018 8.55% p.a
2016-2017 8.65% p.a
2015-2016 8.80% p.a

EPF Contribution by Employee and Employer

EPF contributions are made by the employer and employee regularly every month equally if the organisation has more than 20 employees.

  • An employee contributes 12% of the basic pay and dearness allowance in the EPF account every month
  • If the employee works in the industry of Jute, Beedi, Guar Gum Factories, Coir, and Brick or any industrial company which is declared sick by the Board for Industrial and Financial Reconstruction or has incurred losses equal to or more than its net worth in a financial year or has less than 20 employees has to contribute a lower contribution of 10% in the EPF account
  • An employer also contributes 12% of an employee's basic salary plus DA, of which 8.33% of such employer contribution goes towards Employee Pension Scheme and rest 3.67% is added to the EPF account of the employee.
  • Further, the employer also contributes an additional 1.61% as administration costs related to EPS and insurance.
  • Under the Covid-19 Relief Atmanirbhar 2000000 Crore Package, the government reduced the existing EPF contribution of 12% to 10% for June, July and August 2020.
  • Earlier, 12% of the contribution of both employer and employee was made by the government for the month of March, April and May 2020 for certain eligible organisations.

How to Calculate Interest on EPF?

EPF Interest is compounded monthly and is credited at the end of the financial year. Consider this example to understand better about EPF Interest Calculation.

Suppose the basic salary and dearness allowance of an employee is ₹ 40,000. The break up of EPF contributions would be as follows.

  • Contribution by employee: 12% of 40000 = ₹ 4,800
  • Contribution by employer: Towards EPS = 8.33 % of 40000 = ₹ 3,332
  • Towards EPF: 3.67% of 40000 = ₹ 1,468
  • Additional cost: 1.61 % of 40000 = 321
  • Total EPF Contribution= ₹ 4,800 + ₹ 3,332 + ₹ 1,468 + ₹ 321 = ₹ 9,921

As the EPF Interest is compounded monthly, the EPF interest would be as followed:

Current EPF Interest Rate= 8.5% p.a

EPF Interest = (PF Interest Rate /12) * Total EPF contribution

= 8.5%/12= 0.70%

= 0.70% * ₹ 9,921 = ₹ 69

No Interest on Inoperative EPF Accounts

As per the rules of EPFO, if the employees account become inoperative, he/she will not continue to receive any interest on the funds accumulated in the EPF accounts in the situations as mentioned below:

  • In case the employee retires from his service period after the age of 55 years.
  • In case, the employee migrates abroad permanently.
  • In case the employee has not requested for withdrawal of funds within 36 months of quitting his job.
  • In case the employee passes away.


When is the EPF interest credited?

According to the EPF Act, 1952 EPF interest is calculated on the monthly balance of EPF funds and is credited at the end of the financial year.

Is EPF interest taxable?

No, EPF interest i is not taxable. However, suppose you are unemployed, because of termination, resignation or retirement. In that case, the amount of interest that is credited to your EPF account from the time of leaving the job till you withdraw from the EPF account is taxable.

Is EPF interest compounded monthly?

Yes, EPF interest is calculated on the monthly balance of funds contributed in the EPF accounts.

What is the interest rate of EPF and PPF?

Currently, the rate of interest of EPF and PPF stands at 8.50% p.a and % p.a respectively

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