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EPF Interest Rate

Current PF Interest Rate

Last Updated 20th Jan 2022

  • EPF is a retirement benefit scheme in which employees receive interest on funds deposited in the EPF accounts.
  • 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 EPF rate 2022 stands at 8.50% p.a.
  • The interest received on EPF Balance is exempted from taxes except after the retirement.
  • NEWS: EPFO Credits 22.55 Crore EPF Accounts New
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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%. The employees 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 EPF Interest rate 2022 stands at 8.50%. p.a.

Current & Historical EPF Interest Rates

Financial Year EPF Interest Rates
2021-2022 8.5% p.a
2020-2021 8.5% p.a
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

How to Calculate Interest on EPF?

EPF Interest is compounded monthly and is credited at the end of the financial year. The EPF rates can be calculated either by using the step or the formula method manually. You can also use an online EPF Interest Calculator to calculate Interest on EPF.

Consider this example to understand better about EPF Interest Calculation.

Suppose the basic salary and dearness allowance of an employee is ₹ 50,000. The break up of EPF contributions would be as follows.

  • Contribution by employee: 12% of 50000 = ₹ 6000
  • Contribution by employer: Towards EPS = 8.33 % of 50000 = ₹ 4165
  • Contribution by employer in EPF on threshold of Rs. 15000 income= 8.33% of 15000= Rs. 1249.50
  • Excess contribution towards EPS above the threshold= ₹ 4165- Rs. 1249.50= Rs 2915.50
  • Towards EPF: 3.67% of 50000 = ₹ 1835
  • Total EPF Contribution= ₹ 6000 + Rs 2915.50+ ₹ 1835 =10750.5

Current EPF Interest= 8.5%

Here is the EPF Interest as per the different methods of EPF Calculation:

  • Formula Method: If we calculate EPF Interest using the Formula Method, the calculation would be :(8.5%/12) x Rs.12805= Rs. 90.70 , which is rounded off to Rs.91.
  • Step Method: As the EPF Interest is compounded monthly, the EPF interest would be as followed:

EPF Interest = (PF Interest Rate /12) * Total EPF contribution
= 8.5%/12= 0.70%
= 0.70% * ₹ 12805 = ₹ 90

Example of EPF Interest Calculation for a Financial Year with Employees Provident Fund Interest Rate 8.55%

Months Basic Salary (Including Dearness Allowance) Employer’s Contribution Employees Contribution Total Available Balance at the End of the Month EPF Interest
1 50000 4750 6000 10750 0
2 50000 4750 6000 21500 77
3 50000 4750 6000 32250 153
4 50000 4750 6000 43000 230
5 50000 4750 6000 53750 306
6 50000 4750 6000 64500 383
7 50000 4750 6000 75250 460
8 50000 4750 6000 86000 536
9 50000 4750 6000 96750 613
10 50000 4750 6000 107500 659
11 50000 4750 6000 118250 766
12 50000 4750 6000 129000 843

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 the Employee Pension Scheme and the 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.

What are the Tax Benefits on EPF Contribution?

You can avail of tax benefits on EPF if you have contributed up to Rs. 1 lakh to a PF account. Under section 80C of the Indian Income Tax Act, 1961, you can benefit from this if you contribute to an employee provident fund account for 5 years.

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.

Latest News about EPF Account

  • EPFO Credits 8.50% Interest to EPF Account Holders
    EPFO has credited 8.50 per cent Interest to EPF Account Holders of around 22.55 Crore for the financial year 2021-22.


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 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 until you withdraw from the EPF account is taxable.

What is the EPF interest rate for 2020-21?

EPF Interest Rate for FY 2020-21 stands at 8.5%.

What is the PF interest rate for 2021-22?

For the current financial year, 2021-22, PF Interest Rate is 8.5%.

Is EPF interest compounded monthly?

EPF interest is calculated on the monthly balance of funds contributed in the EPF accounts. For instance, if the monthly balance in your EPF account is Rs. 5000 and the EPFO rate is 8.50%. Thus, the interest will be calculated by multiplying the monthly balance with the EPF account Interest Rate ie. EPF Interest= (8.5/12 * 5000. Alternatively, you can also use an EPF calculator online.

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 7.10% p.a respectively. EPF is a retirement benefits scheme under which employers and employees contribute equally. You can invest in a PPF account with a minimum amount as low as Rs. 500.

What is the method of crediting Interest to the EPF subscriber?

EPFO computes the EPF Interest monthly on the EPF balance in your provident fund account. However, the EPF Interest credit happens at the end of the financial year. Therefore, the PF account’s total balance is the employer’s and employee’s contribution towards EPF and the interest accrued in a financial year.

How much pension will I get from EPF?

The employer's pension contribution in the EPF passbook is the amount deposited by the employer every month in the EPS account of the employee. It comes to around ₹ 1250 every month.

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