How to Calculate the New EPF Interest Rate?

The Employees Provident Fund Organisation (EPFO) has announced a 0.05% increase in the interest rate on EPF for the financial year 2022-23. 

The new interest rate has risen to 8.15%, up from 8.10% in the previous year. The EPFO announced the new interest rate in a circular dated July 24, 2023.

The circular mentions, “The Ministry of Labour and Employment, Government of India, has conveyed the approval of the Central Government under para 60(1) of Employees’ Provident Fund Scheme, 1952 to credit interest @8.15% for the year 2022-23 to the account of each member of the EPF Scheme as per the provisions under Para 60 of EPF Scheme, 1952.” 

The EPF is a retirement savings scheme in India that is managed by the EPFO. It is a contributory pension scheme in which both the employer and the employee contribute a certain percentage of the employee's salary. 

The EPF interest rate is revised every year on the basis of the performance of the investment corpus of the EPFO.

READ| What is EPFO Higher Pension Scheme? Eligibility, How to apply?

How to Calculate the New EPF Interest Rate?

The interest on EPF is calculated every month, but it is credited to the account at the end of the financial year. The interest calculation is as follows:

Interest = (EPF account balance * interest rate) / 12

For example, let's say the employee's basic salary and dearness allowance is ₹ 30,000. The employee's contribution to EPF is 12% of the salary, which is ₹ 3,600. 

The employer's contribution to EPF is also 12% of the salary, but it is subject to a maximum of ₹ 1,250. In this case, the employer's contribution to EPF is ₹ 2,350.

The total EPF contribution every month is ₹ 3,600 + ₹ 2,350 = ₹ 5,950.

The interest rate for EPF for the financial year 2022-2023 is 8.15%. 

Example:

Let's say the employee joined the service on April 1, 2022. The total EPF contribution for April is ₹ 5,950. The interest for April is calculated as follows:

Interest = (5,950 * 8.15%) / 12 = ₹ 70.83

Since the employee joined the service in April, there is no interest for the month of April. The EPF account balance at the end of April is ₹ 5,950.

The total EPF contribution for May is ₹ 5,950. The total EPF account balance as of May is ₹ 11,900. The interest on the EPF contribution for May is calculated as follows:

Interest = (11,900 * 8.15%) / 12 = ₹ 84.29

The interest for May will be credited to the EPF account at the end of the financial year.

How to Check Your EPF Balance?

To check your EPF balance online, you can follow these steps:

• Go to the EPFO website: https://www.epfindia.gov.in/
• Click on Services
• Click on the "Member's Passbook" tab.
• Enter your UAN (Universal Account Number) and password.
• Click on the Sign-in button.

Here are the steps to view your EPF Balance on Umang App: 

• Download and install the UMANG app on your phone.
• Open the UMANG app and register using your mobile number.
• Tap on the "Employees' Provident Fund" (EPFO) option.
• Click on the "View Passbook" button.
• Enter your UAN and click on "Get OTP".
• Enter the OTP received on your registered mobile number and click on "Login".
• Your EPF passbook and balance will be displayed on the screen.