EPFO: You will get 8.25 percent interest on EPFO, know how much money will come in your account? Understand the complete calculation..

The central government has officially approved an interest rate of 8.25 percent on Employees' Provident Fund (EPF) deposits for the financial year 2024-25. This means that there has been no change in the interest rates of EPF. The Finance Ministry has approved it following a recommendation made by the Employees' Provident Fund Organization (EPFO) earlier this year. The decision was proposed during the meeting of the Central Board of Trustees, the top body of EPFO, held in New Delhi in February. According to official sources, the notification regarding the interest rate has been sent by the Ministry of Labor to the retirement fund body during the week. Sources have confirmed that the interest rate on EPF for 2024-25 will be credited to the accounts of EPFO members.

Now the biggest question is how much money will come into the members' accounts as EPF interest. According to experts, this amount depends on the account balance of each EPFO member. The contribution of the employee and the employer is deposited in the EPFO account. This means that every month the EPFO money increases in the members' account. In such a situation, it is very important to understand how much interest is calculated on the money deposited in the members' account. Let us try to understand this with an example.

How to calculate EPF interest

According to Para 60 of the EPF Scheme, 1952, interest is calculated on the monthly current balance amount, even though the interest is deposited at the end of the financial year. At present, the interest rate for the whole year has been fixed at 8.25 percent. In such a situation, interest on your EPF will be calculated at the rate of 0.6875 percent every month. Generally, the interest rate for EPF is announced in the last month of the financial year for which the interest rate is applicable. However, it takes time for the EPF interest to be deposited. This is because the proposal was sent by the Ministry of Labor to the Ministry of Finance. The Finance Ministry has to agree to this and notify it. Once notified, the process of depositing interest in the accounts of EPF members starts.

Calculation of interest on EPF deposits with an example

Let's try to understand the calculation of interest on EPF deposits with an example. Suppose you have a balance of Rs 2 lakh in your EPF account as of April 1, 2024. The basic salary for the financial year 2024-25 is Rs 40,000 per month. According to the rules of the EPF scheme, 12 percent of the basic salary of the employees goes to the EPF account. The employer also contributes the same amount to the EPF. By the way, out of 12 percent of EPF in the employer contribution, 8.67 percent is deposited in EPS, whose limit is Rs 1,250 per month. The remaining amount is deposited in EPF.

Monthly Basic Salary Rs 40,000
Employee's EPF Contribution (40,000X12%) Rs 4,800
Employer's EPF Contribution Rs 3,550
Employer's EPS Contribution Rs 1,250
Total EPF Contribution (Employee + Employer) Rs 8,350
Therefore, in FY 2024-25, Rs 8,350 would have been deposited monthly in the employee's EPF account.

Month EPF Deposit (in Rs) Deposit for Interest Calculation (in Rs) Monthly Interest (in Rs)
April-24 8350 208350 1432.41
May-24 8350 216700 1489.81
June-24 8350 225050 1547.22
July-24 8350 233400 1604.63
August-24 8350 241750 1662.03
September-24 8350 250100 1719.44
October-24 8350 258450 1776.84
November-24 8350 266800 1834.25

December-24 8350 275150 1891.66

January-25 8350 283500 1949.06

February-25 8350 291850 2006.47

March-25 8350 300200 2063.88

Total EPF Interest in FY 2024-25 20,977.69

From the above example, a total interest of Rs 20,977.69 will be credited to the EPF account. This interest will be added to the opening balance of Rs 2 lakh. From the next financial year, the interest amount calculated per month will change as per the change in the opening balance. If the interest rate changes for the next financial year, the interest amount will also change. Apart from this, if the basic salary of the employee is revised due to valuation or any other reason, then the monthly EPF deposit will also change.

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