EPF Interest Rate

Employee Provident Fund (EPF) is a government savings scheme for retirement and regulated by the Employees Provident Fund Organisation (EPFO). Under EPF, the employer as well as the employee contribute on a monthly basis in equal proportions of 12% of employee’s basic salary and dearness allowance. The PF interest rate is applied on the contributed money which is announced by the government each year. The current EPF interest rate is 8.1% p.a.


EPF Interest Rate 2022

After consultation with the Ministry of Finance the EPFO reviews the interest rate of provident fund annually. The EPF interest rate for a financial year is decided at the end of the financial year. The newly announced interest rate will be valid from 1st April of a year to the year ending on 31st March of the next year. The current PF interest rate 2021 is 8.1% p.a. The interest is calculated monthly but it is transferred to the EPF account of the employee only on 31st March of the applicable financial year. The EPF interest rate 2021 is the same as PF interest rate 2020.

Here is the table showing the PF interest rate for the last 5 years:

2021 - 20228.10%p.a.
2020 - 20218.50% p.a. 
2019 - 20208.50% p.a.
2018 - 20198.65% p.a.
2017 - 20188.55% p.a.
2016 - 20178.65% p.a.

Also, know about EPF Balance Check service.

Methods for the Calculation of Interest Rates

The EPFO decides the PF account interest rate annually. The rate of interest depends on the market conditions and is fixed by the finance ministry. The interest rate can be calculated by using any of the following two methods:

  • Step method 
  • Formula method 

Additional Info: The EPF members will require a EPF form 31 for claiming an EPF.

How is EPF Rate of Interest Calculated?

Below is the example of EPF interest rate calculation with the interest rate as 8.50% p.a.:

Example of PF interest calculation for a financial year:

Basic Salary + Dearness Allowance: Rs. 15,000

  • Employee’s contribution for EPF: 12% of Rs. 15,000 = Rs. 1,800
  • Employer’s contribution for EPS: 8.33% of Rs. 15,000 = Rs. 1,250

Employer’s contribution for EPF: Employee’s contribution towards EPF – Employer’s contribution towards EPS = Rs. 550

  • Total EPF contribution for each month: Rs. 1,800 + Rs. 550 = Rs. 2,350

The current EPF interest rate for 2021 to 2022 is 8.50% p.a..

When calculating the interest, the applicable per month interest is 8.50%/12, i.e. 0.7083%.

Suppose the employee joins service on 01.04.2019, his EPF contributions start for the financial year 2019 to 2020 from April.

Total contribution towards EPF for April Rs. 2,350
Interest on EPF contribution for AprilNil as no interest is applied for the first month
Balance of EPF account at the end of April Rs. 2,350
EPF Contribution for the month of May Rs. 2,350
Total EPF contribution for May  4,700
Interest on EPF contribution for May  Rs. 4,700 X 0.7083% = Rs. 33.29

The interest is calculated each month but will be deposited to the PF account only at the end of the financial year (i.e. on 31st March 2020 in this case).

Tax on EPF Interest

Until 2020, EPF contributions as well as interests were completely exempted from tax. However, in the Budget 2021, the Finance Minister of India, Mrs. Nirmala Sitharaman, announced that if the deposits in EPF & VPF (Voluntary Provident Fund) are above Rs. 2.5 Lakhs in a financial year, the interest earned on the contributions above that amount will be taxable. Suppose, if there is no contribution in the EPF account by the employer, the interest component will be exempt up to the deposit of Rs. 5 Lakhs in that particular financial year. These new developments are to organize tax exemption for those who come under high-income groups.

EPF Contribution

It is crucial for employees to understand the contribution made towards the EPF scheme. 

Employee Contribution

The employees’ contribution can be 8% of the basic salary of the employee for women, for the initial 3 years of the employment, 10%, and 12%. 

Employer Contribution

The employer’s contribution towards the EPF scheme can be 10% or 12%. The employer’s contribution is 10% if the number of employees working for the organization is below 20. However, their contribution is split in three categories, i.e. EPF, Employees’ Pension Scheme (EPS), and the Employee Deposit Linked Insurance (EDLI).

Following is the break-up of the employee and employer’s contribution towards the EPF scheme:


What is VPF?

VPF (Voluntary Provident Fund) aka Voluntary Retirement Fund is the contribution made by the employee over & above the minimum contribution set by the EPFO towards his provident fund account. This contribution is above the 12% of contribution by an employee towards EPF. The maximum contribution can be up to 100% of the employee’s Basic Salary & Dearness Allowance. However, the employer does not contribute more than 12% of the employee’s basic salary, regardless of the amount of contribution made by the employee. The VPF interest rate is the same as the EPF.

Related Search of EPF

EPF | EPF Claim Status | EPF Passbook | UAN Member portal | UAN Activation

EPF Interest Rate FAQs

What is the EPF interest rate for 2020-21?


The current PF interest rate for 2020-21 is 8.50% p.a.

When EPF interest is credited?


As per the EPF Act of 1952, EPF interest credit is sent to the member employee’s account as per the monthly running balances w.e.f the last day of each financial year. If the EPF interest not credited on time, you can visit or contact the nearby EPF office.

Is EPF interest compounded monthly?


Yes, the employees provident fund interest rate is compounded monthly and credited at the end of the financial year.

What is the interest rate of EPF and PPF?


The interest rate for EPF is 8.50% p.a. and 7.10% for PPF as of now.

Is EPF interest taxable?


Yes. In the Budget 2021, the Finance Minister of India, Mrs. Nirmala Sitharaman, announced that if the deposits in EPF & VPF (Voluntary Provident Fund) are above Rs. 2.5 Lakhs in a financial year, the interest earned on the contributions above that amount will be taxable.