The purpose of the EPF scheme is to provide financial assistance to employees. In case of an emergency, the EPFO allows employees to withdraw a portion of their EPF after one year of employment. According to the law, any business with 20 or more employees must enroll under the Employees’ Fund Provident Organization. Additionally, each employee can only have one EPF account.
The EPF scheme requires both employers and employees to contribute 12% of the employee’s dearness allowance and basic salary to the employee’s EPF account each month.
The interest rate on the funds accumulated in employees’ EPF accounts is reviewed annually by the EPFO. The interest rate is determined through discussions between the Central Board of Trustees of EPFO and the Ministry of Finance at the end of each financial year. This blog will explain the current EPF interest rate and the timeline.
EPF Interest Rates
The EPF interest rate for the year 2023-2024 is 8.25%. Given below is a list of interest rates of some of the previous years-
| EPF Timeline | EPF Interest |
|---|---|
| 2023-2024 | 8.25% |
| 2022-2023 | 8.10% |
| 2020 – 2021 | 8.50% |
| 2019 – 2020 | 8.50% |
| 2018 – 2019 | 8.65% |
| 2017 – 2018 | 8.55% |
| 2016 – 2017 | 8.65% |
| 2015 – 2016 | 8.80% |
| 2013 – 2015 | 8.75% |
| 2012 – 2013 | 8.50% |
| 2011 – 2012 | 8.25% |
| 2010 – 2011 | 9.50% |
| 2005 – 2010 | 8.50% |
| 2004 – 2005 | 9.50% (9% Interest + 0.5% Golden Jubilee bonus interest) |
| 2001 – 2004 | 9.50% |
| 2000 – 2001 | 12% (April-June, 2001) and 11% (July 2001 onwards) on the monthly running balance |
| 1989 – 2000 | 12.00% |
| 1988 – 1989 | 11.80% |
| 1987 – 1988 | 11.50% |
| 1986 – 1987 | 11.00% |
| 1985 – 1986 | 10.15% |
| 1984 – 1985 | 9.90% |
| 1983 – 1984 | 9.15% |
| 1982 – 1983 | 8.75% |
| 1981 – 1982 | 8.50% |
| 1979 – 1981 | 8.25% |
| 1978 – 1979 | 8.25% + 0.5% bonus (for members who did not withdraw any amount from their PF during 1976-1977 & 1977-1978) |
| 1977 – 1978 | 8.00% |
| 1976 – 1977 | 7.50% |
| 1975 – 1976 | 7.00% |
| 1974 – 1975 | 6.50% |
| 1972 – 1974 | 6.00% |
| 1971 – 1972 | 5.80% |
| 1970 – 1971 | 5.70% |
| 1969 – 1970 | 5.50% |
| 1968 – 1969 | 5.25% |
| 1967 – 1968 | 5.00% |
| 1966 – 1967 | 4.75% |
| 1965 – 1966 | 4.50% |
| 1963 – 1964 | 4.25% |
| 1957 – 1963 | 4.00% |
| 1955 – 1957 | 3.50% |
| 1952 – 1955 | 3.00% |
EPF Contribution Rates
Employee’s Contribution:
The employee contributes 12% of their dearness allowance and basic salary to their own Employee Provident Fund (EPF) account monthly. However, suppose the employee’s organization has fewer than 20 employees or belongs to industries such as jute, beedi, brick, coir, or guar gum factories. In that case, the contribution is reduced to 10% for their EPF account.
Employer’s Contribution:
The employer contributes a total of 12% of the employee’s dearness allowance and basic salary to the following accounts:
- 8.33% to the Employees’ Pension Scheme (EPS)
- 0.50% to the Employees’ Deposit Linked Insurance (EDLI)
Each month, you need to pay for EPF Administrative charges, which will be rounded to the nearest rupee. The minimum amount you have to pay is Rs 500/-. However, if your business doesn’t have any contributing members in a month, the minimum charge drops to Rs 75/-
If your establishment is exempt from the PF Scheme, you will have to pay inspection charges at a rate of 0.18%, with a minimum of Rs 5/-, instead of the usual Admin charges. Similarly, if your establishment is exempt from the EDLI Scheme, the replacement charges are inspection charges at a rate of 0.005%, with a minimum of Re 1/-
How is Interest on EPF Calculated?
Interest on EPF is calculated every month but 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-
Assume an employee, Mr. X, has a monthly salary of Rs. 15,000 (Basic salary + Dearness allowance).
Employee’s contribution to EPF: Rs. 1,800 (12% of Rs. 15,000)
Employer’s contribution to EPS: Rs. 1,250 (8.33% of Rs. 15,000)
Employer’s contribution to EPF: Rs. 550 (3.67% of Rs. 15,000)
Total monthly contribution towards EPF: Rs. 2,350 (Rs. 1,800 + Rs. 550)
Considering the current EPF interest rate of 8.25%, the monthly interest on EPF would be:
8.25% of Rs. 2,350 (8.25% of monthly EPF contribution) = Rs. 193.87
Note: It’s important to note that while interest on EPF is calculated monthly, it is deposited into the account only at the end of the financial year.
In conclusion, the Employees’ Provident Fund (EPF) is a vital savings scheme for employees and employers. The proposed interest rate for 2023-24 is 8.25%, reviewed annually. Knowing that interest is calculated monthly but credited yearly helps individuals plan their finances wisely within the EPF system.
