PF New Interest Rate | EPF Interest Rate Calculator | New PF Interest Rates | Calculate EPF Interest Rate 2022-23
The Employees Provident Fund Organization (EPFO) & Miscellaneous Provisions Act makes EPF i.e., Employee Provident Fund a legally required savings plan. The Employees’ Provident Fund Organization is in charge of it It applies to all businesses with a workforce of 20 or more people. The EPFO i.e., Employee Provident Fund Organization will announce its provident Deposit Interest Rates for 2022-23 next month, with the decision made by the organization’s top ruling body, the Central Board of Trustees. In March, a meeting will be held in Guwahati to discuss the proposed interest rate changes. Read below to check the detailed information related to EPF Interest Rate 2022-23 like Objectives, Required Details to Calculate EPF Interest Rate, Calculate New PF Interest Rates, and much more.
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EPF Interest Rate Comprehensive Details
The employee is required to contribute a certain amount to the provident fund, which is matched by the organization every month. The employee receives a lump sum payment at the end of their employment, which includes the interest on the PF contributions that have accrued. Each year, the EPFO’s Central Board of Trustees, which is the main decision body, decides on the interest rates that must be paid on provident fund deposits. CBT sends the interest rate on EPF deposits it decides for a financial year to the Ministry of Finance for approval. The rate of interest is only provided by EPFO after it has been approved by the government through the ministry of finance. The interest rates on deposits were set at 8.5 percent last year, and the rates for the current financial year will be determined by the year’s income projections.
Objectives of EPF Interest Rate
Those who are employed are covered by the plan. The employers reduce a certain amount of funding from the employee’s salary and deposit it in his or her EPF account, according to the EPF scheme. The employer also contributes significantly to the EPF account of the employee. When an employee retires or in some cases during their employment, he or she obtains a lump sum EPF corpus, which includes the individual’s contribution, the employer’s contribution, and the annual interest amount. The interest rate on EPF accounts is reviewed by the government regularly.
Required Details to Calculate EPF Interest Rate
To calculate an EPF Interest Rate 2022-23, an employee should enter the following is required:
- The current age of an employee
- Monthly basic pay
- Current EPF balance
- Monthly dearness allowance
- Expected salary hike
- Age of retirement
- Monthly EPF contribution in percentage
EPF Contribution Tax Exemptions
Under section 80C of the Indian Income Tax Act, 1961, an employee can receive tax advantages for contributing to a PF account. This provision applies for contributions to a PF account of up to Rs. 1 lakh. If you put money into an employee provident fund account for five years, you won’t have to pay taxes on the money you put in. Income tax will be allowed to deduct at source if the timeframe of your EPF contribution is less than 5 years and you withdraw your PF contribution before it has completed 5 years (TDS).
Employee and the Employer Contributions
Employee contributions can range between 8% (in the case of women for the first three years of employment), 10%, and 12%. The employer’s contribution to the EPF plan is 10% or 12% of the employee’s salary. If the number of workers employed by the company is less than 20, the employer’s contribution is ten percent. The employee’s contribution, on the other hand, is split between the EPF, the Employees’ Pension Scheme (EPS), and the Employee Deposit Linked Insurance (EDLI). The following is a breakdown of the employee and employer contributions to the scheme:
| Contributions | Employee’s contribution | Employer’s contribution |
| EPF | 12% | 3.67% |
| EPS | Nil | 8.33% |
| EDLI | Nil | 0.5% |
The Salary that Exceeds the Wage Ceiling
- Employers can choose from one of the following methods if the employee’s salary is more than Rs.15,000:
- The employer allows employees to contribute 12 percent of their basic salary and dearness allowance, but only up to Rs.15, 000 in total.
- if the employee’s salary exceeds Rs.15,000, the employer may complement the employee’s contribution.
- Both contributions can be limited to the Rs.15, 000 wages ceiling by the employer.
Calculation of the EPF Interest Rate
Employees’ Provident Fund (EPF) is a retirement savings plan for employees who work for companies that are members of the Employees’ Provident Fund Organization (EPFO).
- Contributions are made by both employers and employees.
- Organizations with more than 20 employees must comply.
- The maximum wage is Rs.15, 000 per month.
- From October 1 to December 31, the interest rate is 7.1 percent per annum.
Various Methods to Calculate EPF Interest Rate
Every year, the EPFO determines the interest rate for the EPF scheme. The interest rate is set by the finance ministry and is determined by economic conditions. The step method or the formula method can both be used to calculate the interest rate. The interest rate for the fiscal year 2022-2023 has yet to be announced. The following is an example of interest calculation using both methods and an interest rate of 8.5 percent:
Assumptions
- Rs.40, 000 in EPF basic salary and dearness allowance
- Interest rate: 8.5 percent
- Employer contribution to EPF: Rs.1,468 (3.67 percent of Rs.40,000)
- Employee contribution to EPF: Rs.4, 800 (12 percent of Rs. 40,000).
- Contribution of the employer to EPS (8.33 percent of Rs.40, 000): Rs. 3,332
- Under the Rs.15, 000 wage ceiling, the employer’s contribution to EPS is Rs. 1, 249, which is rounded to Rs. 1,250.
- The employer’s contribution to EPS that is greater than the wage ceiling (Rs. 3, 332- Rs. 1, 249): Rs. 2,082.
- The employer’s excess contribution is added to the EPF contribution (Rs. 2,082 Rs. 1,468), resulting in a total of Rs. 3,550.
- As a result, the total contribution to EPF paid by the organization and employee is Rs. 8,350 (Rs. 4,800 + Rs. 3,550)
Formula Method
The method for calculating interest using the formula method is as follows:
- (8.5 percent /12) x Rs.8, 350 = Rs.59.14, which is rounded to Rs.59
Step Method
The example for calculating interest using the step method is as follows:
- 8.5 percent divided by 12 equals 0.7083 percent, which is rounded off to 0.71 percent.
- 0.71 percent multiplied by Rs.8, 351 equals Rs.59.285 (rounded off to Rs.59)
As a result, the rate of interest is calculated in the same way using both methods. The PF interest calculator, which is available on a variety of third-party websites, can also be used to calculate interest. The opening balance for the following year will be the balance available at the end of the current year.
Post Office Monthly Income Scheme
Example of Interest of Calculation for a Financial Year
The following table shows an example of interest calculation for a full financial year:
| Months | Basic salary plus dearness allowance | The contribution made by the employee (Rs.) | The contribution made by the employer (Rs.) | Total balance that is available at the end of the month (Rs.) | Interest that is generated (Rs.) |
| 1 | 40,000 | 4,800 | 3,550 | 8,350 | 0 |
| 2 | 40,000 | 4,800 | 3,550 | 16,700 | 59 |
| 3 | 40,000 | 4,800 | 3,550 | 25,050 | 118 |
| 4 | 40,000 | 4,800 | 3,550 | 33,400 | 177 |
| 5 | 40,000 | 4,800 | 3,550 | 41,750 | 237 |
| 6 | 40,000 | 4,800 | 3,550 | 50,100 | 396 |
| 7 | 40,000 | 4,800 | 3,550 | 58,450 | 355 |
| 8 | 40,000 | 4,800 | 3,550 | 66,800 | 414 |
| 9 | 40,000 | 4,800 | 3,550 | 75,150 | 473 |
| 10 | 40,000 | 4,800 | 3,550 | 83,500 | 532 |
| 11 | 40,000 | 4,800 | 3,550 | 91,850 | 591 |
| 12 | 40,000 | 4,800 | 3,550 | 1,00,200 | 651 |
15 Years of EPF Interest Rates
The following table depicts the 15 Years of EPF Interest Rates:
| Financial Year | Rate of Interest per annum |
| 2020-2021 | 8.50% |
| 2019-2020 | 8.50% |
| 2018-2019 | 8.65% |
| 2017-2018 | 8.55% |
| 2016-2017 | 8.65% |
| 2015-2016 | 8.80% |
| 2013-2015 | 8.75% |
| 2012-2013 | 8.50% |
| 2011-2012 | 8.25% |
| 2010-2011 | 9.50% |
| 2005-2006 to 2009-2010 | 8.50% |