EPF Interest Rate:- Every year, the EPFO Central Board of Trustees announces a new EPF interest rate after consulting and debating with the Indian Finance Minister. The organization determines the provident fund interest rate by analyzing the current market conditions. The PF interest rate is set at 8.1% for the financial year 2022-2023. Read below to get detailed information related to the EPF Interest Rate like highlights, Important Points, Employee and Employer Contributions to EPF, EPF Eligibility Criteria, Details required to use a PF Interest Calculator, Procedure to use PF Calculator, and much more
Table of Contents
About EPF Interest Rate 2023
The Employees Provident Fund and Miscellaneous Act, of 1952, established the EPF as a retirement benefits program in which each month, the employer and employee make equal monthly contributions to the program. The Employee Provident Fund Organization oversees the Program (EPFO). At retirement and throughout the service time, the employee receives a lump sum payment that includes both their own and the employer’s contributions, together with interest on both (under certain circumstances as stipulated).
The principal sum and any accumulated interest are not subject to income tax when withdrawn, making this a desirable retirement option for those in the salaried class. The Scheme applies to all organizations with 20 or more employees, and some organizations are covered, subject to restrictions and exclusions, even if the minimum personnel requirement is not satisfied.
Latest Update:- Center Clears 8.15% Interest Rates for PF Deposits
For 2023–2024, the Employees’ Provident Fund (EPF) plan will receive interest at a rate of 8.15 percent, as approved by the Union Ministry for Labour and Employment. The central government has given the labor ministry permission to credit interest at a rate of 8.15 percent annually for 2021–2022 to every participant in the EPF program, according to an Employees’ Provident Fund Organisation (EPFO) office directive issued on July 24. The circular additionally directs the relevant authorities to issue the appropriate instructions in order for the interest to be credited to EPF members’ accounts.
The EPFO’s Central Board of Trustees (CBT) established the provident fund’s interest rate for this fiscal year at 8.15 percent on March 28. The amount balancing the growth and surplus funds should have safeguards, according to the CBT. The suggested interest rate of 8.15 percent protects the excess and ensures growing member income. The surplus of Rs 663.91 crore and the interest rate, both of which are 8.15 percent, are larger than they were the previous year.
EPF Interest Rate Highlights
|Name||EPF Interest Rate|
|Issued by||EPFO Central Board of Trustees|
|Objective||To determine the provident fund interest rate by analyzing the current market conditions|
|PF interest rate for 2022-2023||8.1%|
Check EPF Interest Rates 2023 for Last 20 Years
|Financial Year||Annual Interest Rate (%)|
|2000-01||12 Percent (April-June), 11 Percent from July 2001|
EPF Interest Rate Important Points
Some of the important points about EPF Interest Rate are as follows:
- EPF deposits made between April 2022 and March 2022 are now subject to the new interest rate of 8.10%.
- The Workers’ Provident Fund account only receives the interest once a year, on March 31 of the relevant fiscal year, even though it is calculated every month.
- The transferred interest is added to the balance for the following month, which is the balance for April and is then used to compute interest.
- An EPF account becomes dormant or inactive if no contributions are made for 36 months in a row.
- Interest may be paid on inactive accounts for workers who have not yet reached retirement age.
- Money deposited into inactive accounts of retiring employees does not earn interest.
- The member’s slab rate for taxation applies to interest earned on inactive accounts.
- For sums paid by the firm to the Workers’ Pension Plan, the employee will not be paid any interest. However, from this sum, a pension is given to anyone above the age of 58.
Employee and Employer Contributions to EPF
There are two parts to the contribution, namely the employer contribution and the employee contribution, depending on the organization contributing to the EPF. The employee makes a 12% contribution to their EPF account from their base income plus dearness allowance (DA). If the company has fewer than 20 employees or if it is in a certain industry, such as jute, beedi, brick, etc., the employee must make a smaller contribution of 10%. A similar sum (12% of the employee’s base income + DA) is contributed by the employer to the plan. 8.33% of this employer payment, up to a maximum of 1,250 per month if the employee’s salary is $15,000 or more, goes to the Employee Pension Plan (EPS), while the remaining 3.67% is deposited to the employee’s EPF account. The employee’s Employees’ Deposit Linked Insurance (EDLI) account receives a 0.50 percent contribution from the company as well.
It is important to note that the employee has the option to voluntarily contribute more than the minimum statutory amount of 12%, which is known as a contribution to the Voluntary Provident Fund (VPF), which is tracked independently. Although the employer is not required to make any contributions to the VPF if the employee elects to participate in it, the VPF also offers tax-free interest.
EPF Eligibility Criteria
To qualify for EPF benefits, you must meet the following requirements:
- EPF benefits are available to employees of a company starting on the day they start working there.
- EPF benefits may be provided to employees of a company with at least 20 workers.
- Jammu & Kashmir inhabitants are not eligible to get the benefits.
Details Required to Use PF Interest Calculator
The details required to use a PF Interest Calculator are as follows:
- The current age of an employee
- Current EPF balance
- Monthly basic pay
- Age of retirement
- Monthly EPF contribution in percentage.
- Monthly dearness allowance
- Expected salary hike
Procedure to Use PF Calculator
To determine your total wealth by the time you retire as a result of EPF contributions, you can use utilize an EPF or PF calculator. You only need to provide the following information: your age, basic monthly salary, PF contribution in percent, employer contribution in percent, estimated average annual salary rise in percent, retirement age, and interest rate. After entering all the required details, you can check the amount you could save for retirement.
Tax Advantages for EPF
Section 80C of the Income Tax Act, of 1961 allows tax deductions for EPF account holders. With an EPF account, a maximum of Rs. 1 lakh may be used for tax benefits. Also, the money you’ve saved up until this point is tax-free if you’ve made contributions to an EPF account for five straight years. However, the amount accumulated will be subject to TDS deduction upon withdrawal if the length of your EPF account is less than 5 years.