EPFO: The Employees’ Provident Fund Organisation (EPFO) has proposed an interest rate of 8.25 percent for the Employees’ Provident Fund (EPF) for the financial year 2024-25, maintaining the same rate as the previous financial year 2023-24.
EPFO issued a statement
Following this decision, the EPFO issued a statement indicating that the interest rate will be formally announced by the Government of India after receiving the recommendation from the Central Board of Trustees. Subsequently, the EPFO will proceed to credit the interest to the respective accounts.
Many individuals are unaware of the method
Many individuals are unaware of the method used to calculate interest on EPF, which is akin to the calculation and crediting of interest for Public Provident Fund (PPF) accounts. According to Para 60 of the EPF Scheme, 1952, interest is computed on the balance in the account at the conclusion of each month, although it is credited at the end of the financial year.
Typically, the EPFO declares the interest rate for EPF in the final month of the financial year; however, there is a delay in crediting the interest to accounts. This is due to the proposal being forwarded from the Ministry of Labor to the Ministry of Finance, where it requires approval before being officially notified. Once approved, the process of crediting interest to EPF members’ accounts commences.
Here’s a calculation
For instance, if the balance in your EPF account as of April 1, 2024, is Rs 2 lakh, and your basic salary for the financial year 2024-25 is Rs 40,000 per month, then according to EPF regulations, 12 percent of the basic salary is contributed to the EPF account. This contribution is matched by the employer (company). However, from the employer’s 12 percent contribution, 8.67 percent is allocated to the Employees’ Pension Scheme (EPS) account, capped at Rs 1,250 per month, with the remainder being deposited into the EPF account.