EPF Contribution Rate 2020-2021

byMehak BaglaLast Updated: August 17, 2022
EPF Contribution Rate 2020-2021

The Employee’s Provident Fund was launched by the Ministry of Labour & Employment in 1952. The ministry has been actively managing and implementing this fund since the time for the promotion of savings among the working professionals in the country. The idea behind implementing this scheme was to provide the employees with social security and a secure future as a reward for their hard work and dedication to the organisations. EPF was implemented under the Employees’ Provident Funds Act as a compulsory contributory fund for all working professionals.

Under the EPF scheme, both the employer and the employee have to contribute 12% of the employee’s dearness allowance and basic salary to the employee’s EPF account every month. As per the law, any business that has equal to or more than 20 employees is bound to enroll under the Employees’ Fund Provident Organization. Moreover, there can be only one EPF account for each employee.

Since the idea behind the EPF scheme is to provide financial aid to employees, EPFO allows all employees to withdraw a part of their EPF after a year of working, in case of emergency. On top of this, the funds accumulated in the employee’s EPF are accumulated with an interest of 8.5%.

This interest rate is defined/revised by the Government of India every year. Continue reading this blog to find out more about the EPF contribution rate 2020-2021.

EPF Contribution Rates

The EPFO reviews the interest rate offered on the amount collected in employees’ EPF account every year. The interest rate is decided after discussion between the Central Board of Trustees of EPFO and the Ministry of Finance at the end of every financial year.

The EPF contribution rate for the financial year 2021 is 8.5%. Given below is a list of interest rates of some of the previous years-

2020 – 20218.50%
2019 – 20208.50%
2018 – 20198.65%
2017 – 20188.55%
2016 – 20178.65%
2015 – 20168.80%
2013 – 20158.75%
2012 – 20138.50%
2011 – 20128.25%
2010 – 20119.50%
2005 – 20108.50%
2004 – 20059.50% (9% Interest + 0.5% Golden Jubilee bonus interest)
2001 – 20049.50%
2000 – 200112% (April-June, 2001) and 11% (July 2001 onwards) on the monthly running balance
1989 – 200012.00%
1988 – 198911.80%
1987 – 198811.50%
1986 – 198711.00%
1985 – 198610.15%
1984 – 19859.90%
1983 – 19849.15%
1982 – 19838.75%
1981 – 19828.50%
1979 – 19818.25%
1978 – 19798.25% + 0.5% bonus (for members who did not withdraw any amount from their PF during 1976-1977 & 1977-1978)
1977 – 19788.00%
1976 – 19777.50%
1975 – 19767.00%
1974 – 19756.50%
1972 – 19746.00%
1971 – 19725.80%
1970 – 19715.70%
1969 – 19705.50%
1968 – 19695.25%
1967 – 19685.00%
1966 – 19674.75%
1965 – 19664.50%
1963 – 19644.25%
1957 – 19634.00%
1955 – 19573.50%
1952 – 19553.00%

How much is the EPF Contribution?

EPF contribution is made in two parts, every month-

  • Employer’s contribution– The employer contributes a total of 12% of the employees’ dearness allowance and basic salary to the following-
    • 8.33% to the Employees’ Pension Scheme (EPS)
    • 3.67% to the Employees’ Provident Fund (EPF)
    • 0.50% to the Employees’ Deposit Linked Insurance (EDLI)

Apart from this, the employer has to pay an additional charge of 0.50% for administrative accounts with effect from 1 June 2018. If the employer fails to contribute for any specific month, he/she will have to pay a charge of Rs. 75 for that month; however, the minimum administrative charge is Rs. 500.

  • Employee’s contribution– The employee contributes 12% of his/her dearness allowance and basic salary to his/her own Employee Provident Fund (EPF) account. However, if the employee’s organization has less than 20 employees or works for industries such as jute, beedi, brick, coir or guar gum factories, then he/she will be contributing 10% to his/her EPF account.

Calculation of Interest on EPF

It is important to note that even if the interest on EPF is calculated on a monthly basis, it gets deposited to the employee’s EPF account annually. Let’s understand how interest is calculated on EPF with the help of an example-

Suppose that an employee, Mr. X has a monthly salary of Rs. 15,000 (Basic salary + Dearness allowance)


Employee’s contribution towards his EPF account will be Rs. 1800 (12% of 15,000)

Employer’s contribution towards EPS would be Rs. 1250 (8.33% of 15,000)

Employer’s contribution towards EPF would be Rs. 550 *3.67% of 15,000)

Total monthly contribution towards EPF = Rs. 2,350 (Rs. 1800 + Rs. 550)

Considering the current EPF contribution rate to be 8.5%, the monthly interest on EPF would be-

8.5% of 2,350 (8.5% of monthly EPF contribution) = 0.7083%

Now, assuming that the employee joined the organization on 1 April 2019, his contributions to his EPF account would be calculated from the financial year 2019 – 2020.

  • Total EPF contribution in the month of April – Rs. 2,350
  • Interest on EPF for the month of April – NIL (since no interest is offered on the first month of contribution to EPF)
  • EPF account balance at the end of April – Rs. 2,350
  • Total EPF contribution for the month of May (next month) – Rs. 4700 (2350 + 2350)
  • Interest on the EPF contribution for the month of May – Rs. 33.39 (0.7083% of 4700)

It must be noted that while the interest on EPF will be calculated every month, it will be deposited only at the end of the financial year.

Details required to Calculate Interest on EPF

The following details are required to calculate the interest on EPF-

  • Employee’s current age
  • Current EPF balance
  • Basic salary and dearness allowance of a maximum of Rs. 15,000 per month
  • EPF contribution percentage
  • Employee’s retirement age

To Conclude:

EPF contribution rate is decided by the EPFO and the Ministry of Finance for every financial year. It must be noted that even though the interest on EPF is calculated on a monthly basis, the total interest is credited to the employee’s EPF account at the end of every financial year. Now, considering the interest rate for the financial year 2019-2020 to be 8.5%, the monthly interest rate would be calculated as 0.708%.

When is the EPF calculated? Who defines the interest rate on EPF?
EPF is calculated at the end of every financial year by the EPFO Board of Trustees and the Ministry of Finance.
When is the EPF interest credited?
Even though the interest on EPF is calculated on a monthly basis, it gets credited to the employee’s account at the end of every financial year.
Are there any taxation charges on the interest earned on EPF?
The interest earned on EPF amount is taxable as it is considered an income from other sources.
What is the current interest rate on EPF?
The interest rate on EPF for the financial year 2019-2020 is fixed at 8.5%.