EPF is a retirement benefits scheme during which employees receive interest on funds deposited in the EPF accounts, contributed by both employer and employee. An organization with quite 20 employees must contribute to an EPF Account. The current PF rate stands at 8.50% p.a.

EPF rate of interest

EPF or Employee Provident Fund is an old-age pension 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 workers also receive interest on the funds deposited in their EPF account, which is calculated on the monthly balance and is however credited at the top of the fiscal year. The EPF rate of interest is decided by EPFO (Employee Provident Fund Organisation) in consultation with the Finance Ministry for each fiscal year. Currently, the PF rate of interest stands at 8.50%. p.a.

EPF Contribution by Employee and Employer

EPF contributions are made by the employer and employee regularly monthly equally if the organization has quite 20 employees.

  • An employee contributes 12% of the essential pay and dearness allowance in the EPF account monthly
  • If the worker works in the industry of Jute, Beedi, gum Factories, Coir, and Brick or any industrial company which is said sick by the Board for Industrial and Financial Reconstruction or has incurred losses adequate to or quite its net worth during a fiscal year or has but 20 employees has got 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 worker.
  • Further, the employer also contributes a further 1.61% as administration costs associated with EPS and insurance.

How to Calculate Interest on EPF?

EPF Interest is compounded monthly and is credited at the top of the fiscal year. Consider this instance to know better about EPF Interest Calculation.

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

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

Current EPF Interest Rate= 8.5% p.a

EPF Interest = (PF rate of interest /12) * Total EPF contribution

= 8.5%/12= 0.70%

= 0.70% * ₹ 9,921 = ₹ 69

No Interest on Inoperative EPF Accounts

As per the principles of EPFO, if the workers account become inoperative, he/she won’t still receive any interest on the funds accumulated within the EPF accounts within the situations as mentioned below:

  • In case the worker retires from his service period after the age of 55 years.
  • In case, the worker migrates abroad permanently.
  • In case the worker has not requested for withdrawal of funds in 36 months of quitting his job.
  • In case the worker passes away.
  • Latest News about EPF Rates
  • EPFO Announces New EPF Interest Rates
  • For the financial year 2020-21, EPF Rates remain unchanged at 8..50% p.a


✅When is that 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 top of the fiscal year.

✅Is EPF interest taxable?

No, EPF interest isn’t taxable. However, suppose you’re unemployed, due to termination, resignation, or retirement. In this case, the amount of interest that’s credited to your EPF account from the time of leaving the work 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 to the EPF accounts.

✅What is that the rate of interest of EPF and PPF?

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