EPFO INTREST CALCULATION PF : Employees’ Provident Fund Scheme

Employees’ Provident Fund Scheme 1952

The rules related to the calculation of Interest on Provident Fund Contributions are laid down under Para 60 of the Employees’ Provident Fund Scheme 1952

The interest is credited on monthly running balance basis as follows:

1. On the closing balance of the amount as on last date of the preceding year less any sum withdrawn during the current year: interest for 12 months.

2. On the sums withdrawn during the current year: Interest from the beginning of the year till the last date of the month preceding the month in which withdrawal took place.

3. On the amounts of contributions credited during the current year: interest from the first date of month succeeding the month of credit, till the last date of the current year. Once the interest rate for any Financial Year is notified, and the current year ends, the month wise closing balance is calculated and then the interest for the whole year is calculated by adding the monthly running balance and multiplying it with the interest rate /1200. (See illustration)

In case of a member taking the final settlement, the interest calculated as per this rule is added in his settlement amount. 

Note: Interest is separately calculated for the Employee Share and Employer Share of Provident Fund. No interest is calculated on Pension Contribution since benefits are based on the service length and average wages at the time of exit, whether the benefit is through Pension or Withdrawal Benefit.


During final settlement:

In case a member is taking a final settlement and the interest for the current year is not notified, interest is credited on the basis of the rate declared for the immediately preceding year. However on declaration of interest whether at less or higher rate no revision of the settled amount is done.

Interest in the Inoperative Accounts:

No interest is credited in the members’ account from the date when the account has become Inoperative Account as per the provisions of the Scheme [Sub-paragraph (6) of paragraph 72]

A member can read the provisions of the paragraph in the Scheme, but to understand this in easy terms it is requested to see the following:

If a member has retired on completion of 55 years of age


Has migrated abroad permanently


Member has died


No claim has been received for settlement for 36 months from the date when the amount became payable, The account becomes inoperative from that date. Once an account becomes inoperative, no interest is credited further from that date.

So members who are leaving service before 55 years of age should file claims maximum by the age of 58 years to not lose any interest. Members who have retired after 55 years age should file claim maximum within next three years. 

In case of death of a member, the beneficiary should file claim maximum within 3 years of the date of death.

The interest calculation on the EPF of the employee is explained by the given example. The employee provident fund interest rate for 2022-2023 is 8.10%. the interest applicable per month When calculating interest, is = 8.10%/12 = 0.00675%.

However, the total interest for the year will be credited at the end of the financial year. Interest for the FY 2019-20 is 8.5%. Hence, for every month interest calculation, the interest rate will be considered as 0.708%, i.e. 8.5%/12.

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How does an EPFO Calculator Work?

To understand how the EPF calculator works, let us have an example.

Employees Basic Salary + Dearness allowance = Rs 14,000

Employees contribution towards the EPF = 12% * 14,000 = Rs 1,680

Employers contribution towards the EPF = 3.67% * 14,000 = Rs 514

Employers contribution towards EPS = 8.33% * 14,000 = Rs 1,166.

The total contribution by the employer and employee towards the EPF account of the employee = Rs 1,680 + Rs 514 = Rs 2,194.

The interest rate is 8.1% for FY 2022-23.

So the interest rate applicable for each month is: 8.1%/12 = 0.675%

Assuming the employee joined the Firm XYZ in April 2019. The total EPF contribution for April will be Rs 2,194. The EPF scheme will not pay any interest for April.

The total EPF contribution for the month of May = Rs 4,388 (Rs 2,194+ Rs 2,194). He receives an interest of Rs 4,388 * 0.70833% = Rs 31.08.

Similarly, the calculation is done for the subsequent months.

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