EPF rate of interest 2023: All you need to know about its calculations

Updated on: 16 August 2023

Published on: 11 August 2023

The EPF rate of interest has been declared by the EPFO or Employees’ Provident Fund Organisation for the financial year 2022-2023. The announcement made through a circular dated 24^th July 2023, states that the Employee Provident Fund interest rate is currently fixed at 8.15%. 

The Employee Provident Fund or EPF, is a scheme offering retirement benefits to all employed individuals. According to the scheme, your employer deducts a specific contribution amount from your salary and deposits the same in the EPF account. A similar amount is also contributed by your employer to your EPF account. 

After retirement, you receive a lump sum EPF amount, which includes your contribution, your employer’s contribution and the interest accrued. The PF interest rate for these contributions is reviewed by the government periodically. As it stands, the current PF interest rate stands at 8.15%. 

To know more about this EPF rate and how it is calculated, read on.

An overview of the PF interest rate 2023

The EPF interest rate of 8.15% stands applicable for all deposits made between 1st April 2022 and 31st March 2023. When the interest rate is announced for a specific fiscal year, the applicable interest rate is calculated on the monthly closing balance and then computed for the entire year. 

This rule stands applicable when the financial year closes after the declaration of the PF interest rate. Despite monthly interest calculations, know that the total amount is deposited to your EPF account only once during a particular fiscal year, which is March 31. 

The interest transferred gets added to the following month’s balance, after which the interest is calculated. In case no EPF contributions are made for a continuous period of 36 months, the account is considered inoperative or dormant. In such cases, no interest is paid to inactive accounts. 

Read more on How to invest your EPF savings?

How to Calculate the PF Interest?

The following details are required for calculating the EPF interest:

• The current balance of the EPF account
• Retirement age
• The current age of an employee
• Monthly basic pay along with the dearness allowance
• Percentage contributed towards the EPF account

The EPF contribution is added to the account every month, with the interest being calculated monthly. For instance, if the EPF interest rate is 8.15% p.a., the applicable monthly interest rate is considered as 8.15%/ 12.

The EPF scheme offers guaranteed returns wherein you can earn a cumulative interest deposit at the end of a year. To help you understand the calculation, consider a hypothetical example.

This way, EPF interest is calculated for all months in a particular fiscal year, and you can compute the total EPF balance. Remember that the wage ceiling or the salary limit for PF is ₹15,000. However, if an employee’s salary limit for PF exceeds a certain limit, the employer can restrict the contribution to 12% of an employee’s basic salary or DA.

Read more on What to look for in your Salary Slip?

Tabulation of EPF Rates for the Past 20 Years

Here is a tabulated overview of interest rates during the past 20 years to help you understand how the scheme has been generating returns over the years.

Besides knowing the EPF rate of interest, it helps to know how to use an EPF calculator. This tool provides an accurate estimation of the total amount you can earn for a chosen period. It is also accessible online, and you can use it for free. 

It is also important to note that withdrawals from an EPF account aren’t usually permitted unless there is a viable emergency. Thankfully, you can always access funds for your urgent needs by availing an easy loan from Fibe. At Fibe, we offer Instant Personal Loan up to ₹5 lakhs at affordable interest rates. 

What’s more, you can get these funds with ease, as you need only meet simple requirements and submit basic documentation. You can get started online by downloading our Personal Loan App or visiting our website to apply for a loan today. 

FAQs on the EPF rate of interest

How to calculate the EPF interest?

The EPF interest is computed by adding the monthly balances and then multiplying the amount with the applicable Employee Provident Fund interest rate, for 12 contributions. Once you have that value, you can divide it by 12 to know the monthly amount. 

Which is better, an EPF or FD?

Fixed deposits or FDs offer better flexibility and convenience and you can customise a plan that aligns with your financial goals. On the contrary, an EPF levies early withdrawal penalties if you choose to withdraw the corpus before you complete 5 years of continuous service.

However, EPF is a long-term investment option that can help you accumulate a significant corpus by retirement.

What is the highest EPF interest rate?

The highest Employee Provident Fund interest rate stood at 12%, which was applicable between April 2000 and June 2001.

How is EPF calculated on salary?

The EPF is calculated on salary with the employee’s and employer’s contributions as 12%. An employee’s contribution includes their basic pay along with DA, while the employer’s contribution is split as 8.33% to the Employee Pension Plan, and 3.67% is added to the Provident Fund.

How much is the PF deduction from salary?

A total of 12% of the basic pay and DA is deducted from an employee’s salary as the PF deduction.

What is the interest rate of EPF in the last 10 years?

Check the table below to understand the EPF rate of interest during the last 10 years.