Provident Fund Interest Rate at 8.75% for 2014-15
Provident Fund Interest Rate

Employee Provident Fund Interest Rate for Fiscal Year 2019-20

The EPF interest rate for the year 2019-20 is 8.65%.

It is mandatory to own an EPF account if you are in a job and draws a salary of up to Rs.15,000 per month. EPF is optional for individuals drawing a salary of more than Rs.15,000 per month.

How to calculate EPF interest

EPF interest rate is calculated every month but deposited at the end of the financial year. The current rate of interest is 8.65% p.a. for the year 2019-2020.

Let’s discuss with an example.

Basic Salary + DA = Rs. 30,000

Employee’s contribution in EPF = 12% of 30,000 = Rs. 3,600

Employer’s contribution in EPS (subject to limit of 1,250) = Rs. 1,250

Employer’s contribution in EPF = (3,600 – 1,250) = Rs. 2,350

Total EPF contribution every month = 3,600 +  2350 = Rs. 5,950

The point to be noted here is that the interest is calculated only on the EPF part, not on EPS.

So the interest of 8.65% would be calculated on the amount of Rs.5,950 (3,600 +  2350).

Interest Calculation

Let’s assume that the employee started contributing to EPF on 1st April 2019.

Since interest is calculated at the end of every month, we will divide the current interest rate with 12.

One month’s interest rate would be 8.65%/12 = 0.7083%.

Interest accrued for April 2019 = 0 (no interest for first month)

Interest accrued for May 2019 = (April contribution + May contribution) * rate of interest (monthwise)

= (5,950 + 5,950) * 0.7083% = Rs. 84.29

Interest for contribution till May 2019 = Rs. 84.29.

History of Employee Provident Fund

EPF was started way back in 1952 by the government of India. The main purpose of the EPF account is to encourage employees to save & invest money for future needs like education of the child, marriage and of course retirement purpose.

History of EPF Interest rates since its establishment is as below (curated list from present to past). 

  • Employee Provident Fund EPF Interest Rate 2019-20: 8.65%
  • Employee Provident Fund EPF Interest Rate 2018-19: 8.65%
  • Employee Provident Fund EPF Interest Rate 2017-18: 8.55%
  • Employee Provident Fund EPF Interest Rate 2016-17: 8.80%
  • Employee Provident Fund EPF Interest Rate 2015-16: 8.80%
  • Employee Provident Fund EPF Interest Rate 2014-15: 8.75%
  • Employee Provident Fund EPF Interest Rate 2013-14: 8.75%
  • Employee Provident Fund EPF Interest Rate 2012-13: 8.50%
  • Employee Provident Fund EPF Interest Rate 2011-12: 8.25%
  • Employee Provident Fund EPF Interest Rate 2010-11: 9.50%
  • Employee Provident Fund EPF Interest Rate 2009-10: 8.50%
  • Employee Provident Fund EPF Interest Rate 2008-09: 8.50%
  • Employee Provident Fund EPF Interest Rate 2007-08: 8.50%
  • Employee Provident Fund EPF Interest Rate 2006-07: 8.50%
  • Employee Provident Fund EPF Interest Rate 2005-06: 8.50%
  • Employee Provident Fund EPF Interest Rate 2004-05: 9.50%
  • Employee Provident Fund EPF Interest Rate 2003-04: 9.05%
  • Employee Provident Fund EPF Interest Rate 2002-03: 9.50%
  • Employee Provident Fund EPF Interest Rate 2001-02: 9.50%
  • Employee Provident Fund EPF Interest Rate 2000-01: 11.00%
  • Employee Provident Fund EPF Interest Rate 1999-00: 12.00%
  • Employee Provident Fund EPF Interest Rate 1998-99: 12.00%
  • Employee Provident Fund EPF Interest Rate 1997-98: 12.00%
  • Employee Provident Fund EPF Interest Rate 1996-97: 12.00%
  • Employee Provident Fund EPF Interest Rate 1995-96: 12.00%
  • Employee Provident Fund EPF Interest Rate 1994-95: 12.00%
  • Employee Provident Fund EPF Interest Rate 1993-94: 12.00%
  • Employee Provident Fund EPF Interest Rate 1992-93: 12.00%
  • Employee Provident Fund EPF Interest Rate 1991-92: 12.00%
  • Employee Provident Fund EPF Interest Rate 1990-91: 12.00%
  • Employee Provident Fund EPF Interest Rate 1989-90: 12.00%
  • Employee Provident Fund EPF Interest Rate 1988-89: 11.80%
  • Employee Provident Fund EPF Interest Rate 1987-88: 11.50%
  • Employee Provident Fund EPF Interest Rate 1986-87: 11.00%
  • Employee Provident Fund EPF Interest Rate 1985-86: 10.15%
  • Employee Provident Fund EPF Interest Rate 1984-85: 9.90%
  • Employee Provident Fund EPF Interest Rate 1983-84: 9.15%
  • Employee Provident Fund EPF Interest Rate 1982-83: 8.75%
  • Employee Provident Fund EPF Interest Rate 1981-82: 8.50%
  • Employee Provident Fund EPF Interest Rate 1980-81: 8.25%
  • Employee Provident Fund EPF Interest Rate 1979-80: 8.25%
  • Employee Provident Fund EPF Interest Rate 1978-79: 8.25%
  • Employee Provident Fund EPF Interest Rate 1977-78: 8.00%
  • Employee Provident Fund EPF Interest Rate 1976-77: 7.50%
  • Employee Provident Fund EPF Interest Rate 1975-76: 7.00%
  • Employee Provident Fund EPF Interest Rate 1974-75: 6.50%
  • Employee Provident Fund EPF Interest Rate 1973-74: 6.00%
  • Employee Provident Fund EPF Interest Rate 1972-73: 6.00%
  • Employee Provident Fund EPF Interest Rate 1971-72: 5.80%
  • Employee Provident Fund EPF Interest Rate 1970-71: 5.70%
  • Employee Provident Fund EPF Interest Rate 1969-70: 5.50%
  • Employee Provident Fund EPF Interest Rate 1968-69: 5.25%
  • Employee Provident Fund EPF Interest Rate 1967-68: 5.00%
  • Employee Provident Fund EPF Interest Rate 1966-67: 4.75%
  • Employee Provident Fund EPF Interest Rate 1965-66: 4.50%
  • Employee Provident Fund EPF Interest Rate 1964-65: 4.25%
  • Employee Provident Fund EPF Interest Rate 1963-64: 4.00%
  • Employee Provident Fund EPF Interest Rate 1962-63: 3.75%
  • Employee Provident Fund EPF Interest Rate 1961-62: 3.75%
  • Employee Provident Fund EPF Interest Rate 1960-61: 3.75%
  • Employee Provident Fund EPF Interest Rate 1959-60: 3.75%
  • Employee Provident Fund EPF Interest Rate 1958-59: 3.75%
  • Employee Provident Fund EPF Interest Rate 1957-58: 3.75%
  • Employee Provident Fund EPF Interest Rate 1956-57: 3.50%
  • Employee Provident Fund EPF Interest Rate 1955-56: 3.50%
  • Employee Provident Fund EPF Interest Rate 1954-55: 3.00%
  • Employee Provident Fund EPF Interest Rate 1953-54: 3.00%
  • Employee Provident Fund EPF Interest Rate 1952-53: 3.00%

What are the Tax-Benefits of EPF contribution?

You can get a tax benefit of up to Rs. 1.50 lakh u/s 80C of Income Tax Act, 1961. EPF investment is a completely tax-free income including the contribution, interest accrued and withdrawals are exempted from the income tax.

However, premature withdrawal (withdrawal before 5 years of continuous contribution) is taxable.

Read – Best tax saving investments in India

What is the Break-up of EPF Contribution

If your basic salary plus dearness allowance is Rs.15,000 than the contribution would be proportioned in the following way:

Scheme Employee
Contribution
Employer
Contribution
Employee Provident Fund Rs.1,800 Rs.550.5
Employees Pension Scheme 0 Rs.1,249.5
Employee Deposit Linked Insurance 0 Rs.75

You can also read – How to check EPF balance online.

Note:

  1. For Fiscal Year 1978-79 bonus of 0.5% was applicable to the members who did not withdraw any amount from their Provident Fund account during 1976-77 and 1977-78.
  2. For Fiscal Year 2000-01, interest rate was 12% for the quarter starting from April to June, thereafter 11% from July onward on monthly running balance.
  3. For Fiscal Year 2004-05, bonus of 0.50% was Golden Jubilee Interest Rate bonus.

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