EPF Interest Rate 2020-21 – Current PF Interest Calculation


Financial YearEPF Interest Rate (per annum)
2019-20208.5%
2018-20198.65%
2017-20188.55%
2016-20178.65%
2015-20168.80%
2013-20158.75%
2012-20138.50%
2011-20128.25%
2010-20119.50%

The Employees’ Provident Fund (EPF), which is sometimes also called Provident Fund (PF), is an investment scheme that works well if you’re looking to build a retirement corpus. The EPF interest rate is decided by the EPFO’s central board of trustees, after consultation with the Ministry of Finance.

For FY 2019-20, the interest rate has been fixed at 8.50%, down from the 8.65% that was applicable for FY 2018-19. The rate has been fluctuating between 8.55-8.80% since 2015.

EPF Contribution by Employee and Employer

An employee having a Basic + Dearness Allowance of less than ₹15,000 must mandatorily open a PF account. 12% of the monthly salary goes towards EPF contribution, and the employer contributes the same amount of money.

While individuals with a Basic + Dearness Allowance of more than ₹15,000 aren’t required to compulsorily invest in an EPF scheme, they can do so voluntarily.

How to Calculate Interest on EPF?

For an employee whose monthly salary is ₹30,000, the calculation is as follows:

  • EPF contribution of employee – 12% of ₹30,000 = ₹3,600
  • Employer’s contribution in EPF – 3.67% of ₹30,000 = ₹1,101
  • Employer’s contribution in EPS – 8.33% of ₹30,000 = ₹2,499
  • Total EPF contribution – ₹7,200

This is how EPF is calculated when the contribution of both parties is 12%. While it is generally the case for most organizations, employees working in certain companies, or industries, are required to contribute only 10% of their monthly salary towards EPF.

Tax Benefits on EPF contributions

You must probably be aware that investments made in stocks, mutual funds, and bonds are all taxable. This is not the case with an EPF account, with the investment amount and interest earned both exempt from tax under Section 80C. To ensure this, however, you mustn’t withdraw money from your EPF account within five years.

Important Points and FAQs

When is the EPF interest credited?

As per the EPF Act, the interest in the EPF is calculated on the monthly balance of the EPF funds and is allocated at the end of the financial year.

Whether any employee can join the EPF directly?

No, it is only by means of employment in an organization that is subject to the provisions of the EPF & MP Act, 1952.

What is Universal Account Number (UAN)?

The UAN is essentially a 12-digit number that works pretty much like your bank account number, with the exception that it is used to access your PF account and not your bank account.

After leaving the company, can an employee contribute to the EPF?

No, no recovery will be impacted in the absence of wages and the employer. Any contribution by the Member shall be proportional to the employer’s part of the contribution.

If an employee is not a member of the PF, to whom can he approach?

He can approach his employer failing which he can approach the Regional Provident Fund Commissioner of the nearest PF office.

Can an employee be a member of the EPF without any age limits?

There is no age limit on being a member of the Provident Fund, while an employee who’s already reached the age of 58 cannot become a member of the Pension Fund.