How to Calculate PF Interest Rate?


6 min read


A provident fund is a retirement investment fund to support your long-term investment goals to save for your retirement. To support employees financially in post-retirement life, the government of India started various provident fund schemes such as GPF or General Provident Fund, EPF or Employee Provident Fund, and PPF or Public Provident Fund. For people with a regular source of income, the various PF accounts promote the practice of savings for the future.

EPF, or the employee provident fund, a savings cum retirement policy, is the most popular PF scheme in India. EPF is available at an 8.15% PF interest rate in India for the FY 2022-23, as declared by EPFO India. It is mandatory for organizations that have a headcount of more than 20 employees.

EPF Contribution by Employee and Employer

To understand and calculate EPF contributions better, you should know how the EPF account balance contribution is made.

As we know, the EPF contribution is made by the employee as well as the employer. The employees contribute around 12% of their basic pay and dearness allowance for the initial three years of the job. This contribution amount can be 10% or even 8% in the case of women employees and as per the salary of the employee.

On the other hand, the employer contribution towards EPF is around 10 or 12%, depending on the number of employees in the organization. If the company has 20 or fewer employees as well as meets certain other conditions of the EPFO, the employer is eligible to pay a 10% contribution to the EPF.

Wage Ceilings to Understand

If an employee earns a salary of more than INR 15,000, the employer can make EPF contributions in any of the three ways mentioned below:

  • They may restrict INR 15,000 as the employee and employer contributions per year, or
  • They may contribute to match the employee contributions beyond the wage ceiling, or
  • They may allow the employee to contribute 12% of their basic pay and dearness allowance (DA) and may limit their share up to INR 15,000 of the wage ceiling

Formula for PF Interest Calculation

To calculate the EPF interest rate, you can use the formula method or the step method. Let’s take an example here.

For instance,

The EPF basic salary plus DA = INR 50,000

ROI or PF contribution rate of interest = 8.15%

Employee’s contribution = INR 6,000 (which is 12% of INR 50,000)

Employer’s contribution = INR 1,835 (3.67% of INR 50,000 towards EPF)

Employer’s contribution = INR 4,165 (8.33% of INR 50,000 towards EPS)

Further, the contribution of the employer towards EPS under the wage ceiling of INR 15,000 = INR 1249 rounded to INR 1250 (8.33% of INR 15,000)

The employer’s contribution to EPS beyond the wage ceiling = INR 2,916 (INR 4,165 – INR 1,249)

Employer’s excess contribution added to EPF contribution = INR 4,751 (INR 2,916 + INR 1,835)

Hence, the contribution made in total by both employer and employee towards EPF = INR 10,751(INR 6,000 + INR 4,751)

Process to calculate EPF via the Formula Method

(8.15%/12) x INR 10,751= INR 73.01 or INR 73 (rounded)

Process to calculate EPF via the Step Method

8.15%/12 = 0.6791% or 0.68% (rounded)

0.68% x INR 10,751 = INR 73.10 or Rs.73 (rounded)

Both the methods mentioned above can be used to calculate the EPF interest rate. However, to make the calculations easy, you can take the support of the PF calculator or the EPF interest calculator available online.

Components of the Formula

Here is a breakdown of the various components of the EPF formula:

1. Opening Balance:

The opening balance in the EPF account means the contributions of the employee and the employer plus the earned interest in the previous FY. When an employee opens a new EPF account, the opening balance stays nil, which makes the interest on the first month zero. You can check this information in the EPF official portal in the ‘view passbook’ section.

2. Contributions Made During the Year:

It is the total contribution made by an employer and an employee towards the employee’s EPF. The contribution made by an employer is mostly 10 % to 12% of the basic salary plus the DA of the employee. On the other hand, the employee must also make a 10% to 12% contribution towards your EPF. However, female employees might pay only 8% contribution towards their PF account.

3. Monthly Balance Calculation:

To get the monthly balance calculations, you need to multiply your closing balance at the end of the month by the current PF interest rate and divide by 12.

4. Closing Balance

The balance at the end of 12 months and the total interest accrued in that year is termed the closing balance in EPF. The closing in the current FY becomes the opening balance for the next FY.

Illustrative Example

Let’s say Mr. Sunil Verma joined a company at a basic salary of INR 15,000/month.

So, the EPF contribution of the employee (Sunil Verma) in this case will be 12% of INR 15,000 = INR 1,800

Now, the EPF contribution percentage from the employer (the company he works for) is 8.33% to EPS = INR 1,250 and 3.67% to EPF = INR 550

Hence, the total contribution will be =INR 2, 350

For the first month of the tenure of Sunil Verma, the EPF contribution was INR 2,350 with zero interest. In the second month, the EPF balance was the account balance of the first month plus the contribution of the second month, which is INR 4,700.

EPF Interest rate 2022-23 = 8.15%

So, EPF interest per month = 8.15 %/12 = 0.679%

Hence, the second month’s contribution = 0.679% multiplied by INR 4, 700 = INR 31.91

You can make this calculation easy with the help of an EPF pension calculator available online.

Factors Influencing PF Interest Rate

Here are some factors affecting EPF interest rate:

1. Economic Conditions:

The GDP, or the overall growth of a country’s economy, is a significant determinant in the EPF interest rates and employment trends of the country.

2. Inflation:

EPF interest rate is also adjusted as per the inflation rate. So, inflation is a strong factor that determines the EPF interest rate.

3. Government policies:

Policies made by the government, by RBI, etc., also play an important role in influencing the EPF interest rates. Moreover, modifications and alterations in the financial reforms can also impact the EPF interest rates.

4. Market conditions:

Changes in market conditions or fluctuations in market rates can also affect the EFP interest rates.

5. Fund performances:

The interest rate of your EPF may be influenced by the performance of EPFO investment strategies. At the same time, it is also affected by the return on investments by the EPF.

EPF Interest Rates for the Last 15 Years 

FY – Financial Year

ROI – Rate of Interest p.a.





















2005-2006 to 2009-2010


Updates and Notifications

For any updates and latest notifications on PF interest rates, you must log in to the official portal of the Employees’ Provident Fund Organisation (EPFO).

Common Mistakes to Avoid

Here are some common mistakes to avoid while calculating PF interest rates:

1. One common mistake you may make while calculating the PF interest rate is to do it without considering the employee and employer contribution share. Remember that while calculating the PF interest rate, you must calculate the employee and employer share separately to get the exact amount.

2. What happens if your employer has not credited your PF interest rate for years? If your PF interest rate has not been credited for years, in that case, it is essential to contact the PF office to check why it is not getting credited to solve the issue and to claim the interest.

Using Online Calculators

To make the EPF interest rate calculations easy, you can use the PF interest calculator available online. EPF calculator is easy to access and helps calculate the interest rate in seconds by submitting the required values.

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FAQs: How to Calculate PF Interest Rate

What is the provident fund interest rate in India?

8.15 % is the interest rate of EPF in India in the year 2022-23

What is PF in salary?

PF in salary means a compulsory contribution made by an employee and an employer towards a retirement fund backed by the government of India.

How to calculate PF?

The method of PF calculation is explained with illustration in the post above. You may go through it for details.

What is the PF interest rate in India?

8.15% is the interest rate for PF in India for FY 2022-23.

Does the EPF interest rate stay fixed or vary?

The EPF interest rate is fixed by the government of India, and they revise the interest rate from time to time.

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Dec 21, 2023
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