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2024 EPF Interest Rates: Everything You Need to Know

The Employee Provident Fund (EPFO) in India allows corporate employees to accumulate a pension fund, overseen by the EPFO organization.

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2024 EPF Interest Rates: In India, employees in corporate settings have the opportunity to accumulate a pension fund through the Employee Provident Fund, or EPF. More people refer to the EPF as just PF or Provident Fund. The EPFO is the organization in charge of overseeing all operations.

Interest rate on EPF in 2024

For the fiscal year 2023–2024, the central board of the Employees Provident Fund Organization (EPFO) suggested today that members’ accounts containing EPF accumulations receive an annual rate of interest of 8.25%. Compared to the 8.15% interest rate for FY23, the interest rate for EPF contributions in FY24 is 10 basis points higher.

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Keep in mind that the EPFO changes the PF interest rate once a year. The rate is good for the following fiscal year after the EPFO releases the new interest rates on EPF deposits. This indicates that the new rate will be in effect from April 1 of one year to March 31 of the next year.

EPF deposits have a fixed interest rate ranging from 8% to 13% annually. EPF credits the interest on deposits annually to your account, but it can calculate it monthly. For instance, if the EPF rate is 8.1%, it calculates your monthly EPF deposit interest as 8%.

The EPFO paid 8% interest on EPF contributions between 1977 and 1970. Interest on PF contributions has been at least 8.25% ever since. Sixty million EPFO users will be impacted by the government’s decision.

Finance Minister Nirmala Sitharaman stated that reality set the interest rate on the Employee Provident Fund (EPF), and the return rate on other modest savings instruments was even lower than the EPF rate. The fact that these are the current rates and that EPFO is still more than the others does not change, she added. “There are today’s realities, which do keep us in the context of decisions taken by the central board of EPFO.”

What is EPFO?

The Labour Ministry is in charge of the EPFO, which was established in 1951. The Employees’ Provident Fund Organization is known by its abbreviation, EPFO. Employees in India’s private and public sectors can save money for retirement with the aid of the EPFO.

Every EPF member is given a Universal Account Number (UAN) by the EPFO, which serves as the member’s unique identifier for all PF-related transactions.

EPF Claim Status: Review the entire process here

EPF: What is it?

The Employees’ Provident Funds and Miscellaneous Provisions Act of 1952 designates the EPF as its primary program. The EPFO requires all businesses with 20 or more employees to register and provide their staff with the benefits of the EPF plan. In some cases, businesses must comply even if they employ fewer than 20 individuals.

PF: What is it?

It is sometimes known as EPF, a government-managed pension plan designed to assist Indian salaried workers in saving money for their retirement.

PF Full form

The Employee Provident Fund, or EPF for short, is a retirement savings plan that pays out a lump sum to all salaried workers.

PF Qualifications

All employees who were paid up to Rs 15,000 per month when they started employment are required to enroll in the EPF plan. An employee may also enroll in the EPF plan with the assistant PF commissioner’s approval if their monthly pay exceeds Rs 15, 000.

EPF: Contributions from employers and employees

Both the company and the worker contribute twelve percent of the worker’s base pay and dearness allowance to the Employee Provident Fund (EPF). While employees have the option to increase their contributions to the EPF, employers are not obligated to do so.

EPF contribution

Contributor Monthly percentage of salary plus dearness allowance
Employer 12%
Employee 12% or 10%*
Total 24% or 22%*

Be aware that the 12% match from your company is divided among many baskets. Only 3.67% of this contribution goes into the EPF account; the remaining 8.33% goes into the Employee’s Pension Scheme, or EPS account. On the other hand, the employee’s whole contribution is deposited into the EPF account.

Women EPF contribution

In Budget 2018, the government lowered the contribution for female employees to 8% for the first three years of their employment, depending on the kind of company, to empower women.

Salary components for the purpose of EPF contribution calculation

  • Basic salary
  • Dearness allowance
  • Retaining allowance
  • Conveyance allowance
  • Other allowance
  • Special allowance
  • Leave travel allowance
  • Fixed cash allowance, including management allowance, educational allowance, medical allowance, telephone allowance & food allowance
  • Petrol reimbursement
  • Compensatory allowance

Salary components excluded from EPF contribution calculation

  • House rent allowance (HRA)
  • Attendance allowance
  • Night shift allowance
  • Washing allowance
  • Relocation allowance
  • Overtime allowance
  • Canteen allowance
  • Special benefits
  • Bonus
  • Commissions

Are you able to increase your EPF contribution?

Yes, you can use the Voluntary Provident Fund (VPF) to make larger contributions to your EPF account.

EPF computation

Basic pay, dearness allowance, and retaining allowance are taken into account while calculating EPF contributions. Employees receive interest on these payments as well as a lump sum payment upon retirement.

Example of EPF calculation

Let’s say your base pay is Rs 50,000 + dearness allowance. You will make a Rs 6,000 payment to your EPF account. Employers can choose to contribute more voluntarily, however the least amount they must deposit to their EPF account is 12% of Rs 15,000. Your employer may contribute to your EPF account using any combination of the following methods:

Method Employee contribution Employer contribution
1 12% of basic salary plus DA 12% of basic pay
2 12% of basic salary plus DA 3.67% of basic pay
3 12% of Rs 15,000 3.67% of Rs 15,000

Note: Of the Rs 15,000 in your EPS account, the employer can only contribute 8.33%. This means that even if your base pay is Rs 50,000, his contribution to your EPS account cannot exceed Rs 1,249 (8.33% of Rs 15,000.

For the purpose of PF computation, we will deposit your and your employee’s contributions based on a breakdown of Rs 50,000 as your pay.

Your share: Rs 6,000, or 12% of Rs 50,000

The employer’s portion is Rs 1,835 (3.67% of Rs 50,000).

Employer’s share of EPS is 8.33% of Rs. 15,000, or Rs. 1,250.

The employer transfers the remaining cash to your EPF account because they are unable to deposit more than 8.33% of your Rs 15,000 in your EPS account.

Hence, the EPF account’s total balance is equal to Rs 6,000 + Rs 1,835 + Rs 2,915 = Rs 10,750.

EPF account following a change in employment

When moving jobs, employees do not need to apply for the transfer of their EPF accounts. The new employer may request information regarding the employee’s EPF account in order to contribute to the account. If you don’t, the employer will issue you a new member ID and create a new account.

Tax on the quantity of PF

The income tax laws exempt interest generated on funds in your personal savings account. This indicates that subject to a few restrictions, the full corpus is free from taxes at the time of maturity. In actuality, an employee may deduct expenses under Section 80C about the contributions paid to their EPF account.

EPF disengagement

Employees can choose to increase their contributions to the EPF, but employers are not required to do so. For information on the terms and conditions, see our guide on EPF withdrawals.

EPFO updates

The TDS rate on PF withdrawal for cases other than PAN is 20%.

  • The 2023-24 Budget includes a reduction in tax deducted on EPF withdrawals from 30% to 20% for PF account holders who fail to provide their PAN.

Net new EPFO enrollments hit a record 12.2 million in FY22

Finance Minister Nirmala Sitharaman stated, “Reducing the TDS rate from 30% to 20% on the taxable portion of EPF withdrawal in non-PAN cases,” in her February 1, 2023, budget speech.

Muskan Manocha
Muskan Manocha
Muskan Manocha is pursuing graduation from University of Delhi.

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