Employee Provident Fund (EPF) is an important savings scheme in India, which helps employees to save money for their future. The scheme is mainly made for the employees of the organized sector. EPF not only incorporates the contribution of employees and employers but also adds interest on it. In this article, we will discuss in detail about how to calculate it using EPF interest, current interest rate, and Excel Calculator.
Introduce EPF Interest Rate and Calculation
EPF interest rate is fixed by Employees’ Provident Fund Organization (EPFO) every year. This rate is determined after the advice of the Finance Ministry. Interest is deposited monthly on the EPF but is credited to the account at the end of the year (31 March).
EPF observation table
| Description | Acquaintance |
| Name of the scheme | Employee Provident Fund (EPF) |
| Management institution | Employee Provident Fund Organization (EPFO) |
| Current interest rate (2024-25) | 8.25% |
| Employee contribution | 12% of Basic Salary + DA |
| Employer contribution | 12% of Basic Salary + DA |
| Interest deposit time | At the end of the year (31 March) |
| Interest calculation basis | Monthly balance |
EPF interest rate 2024-25
The interest rate of EPF for the financial year 2024-25 has been fixed at 8.25%. This is slightly higher than the previous year, which is a relief news for employees. The interest rates of the last few years are given below:
| Year | Interest rate (%) |
| 2020-21 | 8.50 |
| 2021-22 | 8.10 |
| 2022-23 | 8.15 |
| 2023-24 | 8.25 |
How to do EPF Interest Calculation?
Interest on EPF is calculated on a monthly basis but is added to the account at the end of the year. Let us take an example to understand this:
Example:
- Basic Salary + Da: ₹ 40,000
- Employee Contribution: ₹ 4,800 (12% of ₹ 40,000)
- Employer Contribution: ₹ 4,800 (12% of ₹ 40,000)
- Interest Rate: 8.25%
Calculating Process:
- Add monthly contribution:
- Employee Contribution: ₹ 4,800
- Employer contribution: ₹ 4,800
- Total monthly contribution: ₹ 9,600
- Monthly Interest Rate:
- = 12 = 8.2512 = 0.6875%
- ,
- 12
- ,
- 12
- 8.25
- = 0.6875%
- Total balance of first month: ₹ 9,600
- First month interest:
- 9,600 × 0.006875 = ₹ 66
- 9,600 × 0.006875 = ₹ 66
- Next month balance:
- ₹ 9,600+₹ 9,600 = ₹ 19,200
- ₹ 9,600+₹ 9,600 = ₹ 19,200
- Second month interest:
- 19,200 × 0.006875 = ₹ 132
- 19,200 × 0.006875 = ₹ 132
This process continues to the entire financial year and is added to the total interest account at the end of the year.
How to calculate EPF Interest from Excel Calculator?
You can easily calculate your EPF balance and interest by using Excel Calculator. For this, follow the steps given below:
- Open the Excel sheet and create the following columns:
- month
- Basic salary + da
- Employee contribution
- Employer contribution
- Total contribution
- Monthly interest
- Cumulative balance
- Set the formula:
- Employee Contribution: = Basic Salary * 12%
- Employer Contribution: = Basic Salary * 3.67%
- Monthly Interest: = Cumulative Balance * (Interest Rate/12)
- Total Balance: = Previous Balance + Total Contribution + Monthly Interest
- Fill the data for all months and copy the formula.
Excel formula example:
If your basic salary is ₹ 40,000 then the formula will be:
= Roundup (0.12*40000,0) // Employee Contribution
= Roundup (0.0367*40000,0) // Employer Contribution
EPF profit
EPF Plan provides many benefits to employees:
- Retirement Savings: This scheme provides a safe fund for retirement.
- Rebate on interest: Interest on EPF is tax free.
- Easy withdrawal: Under certain circumstances you can do partial withdrawal from your EPF account.
- Pension Benefits: Part of employer also goes to EPS (Employee Pension Scheme).
Disclaimer:
This article is written only for the purpose of providing information. Keep in mind the latest updates and rules released by EPFO. Contact the official sources or financial advisors if you have any doubt related to your EPF account or interest calculation. This article will help you understand your EPF and its calculation better. By using Excel Calculator, you can plan your future savings and get your retirement goals.
