Credit Score powered by our Bureau Partners

EPF Interest Rate 2026

Get your FREE Credit Score & Report in just 2 minutes

Latest Update:

The Employees’ Provident Fund (EPF) continues to be a reliable long-term savings option for salaried individuals. For the financial year 2025–26, the EPF interest rate has been fixed at 8.25% per annum, applicable to all eligible contributions made during the period. While the interest on EPF is calculated on a monthly basis using the account’s closing balance, the accumulated interest is credited to the member’s account once a year.

From a taxation perspective, EPF interest remains tax-exempt for most contributors. However, if an employee’s own contribution exceeds ₹2.5 lakh in a financial year, the interest earned on the excess amount becomes taxable. In the case of government employees, this tax-free limit is higher, capped at ₹5 lakh per year. Understanding these rules helps EPF members plan their contributions efficiently while maximising long-term returns.

EPF Contribution by Employee and Employer

Employee Contribution

EPF contribution is made up of two parts - Employer’s contribution and Employee’s contribution.
The employee’s contribution is given at 12% of the basic salary plus dearness allowance towards the EPF account.
If the organisation has less than 20 employees, the employee contribution is lower and stands at 10%.
For industries such as Jute, Beedi, Coir, Brick, Guar Gum, and more, a lower contribution of 10% applies.

Employer’s Contribution

From the employer’s contribution to PF, 8.33% is added to the employee’s pension scheme. Whereas, 3.67% goes towards the Employee Provident Fund account.
Apart from this, the employer must contribute 0.50% towards the Employees’ Deposit Linked Insurance (EDLI) account. The minimum administrative charge is Rs. 500. However, if no contribution is made for a specified month, the employer is required to pay a fee of Rs.75 for that month.

How to Compute the Contribution of EPF?

Let us understand this with an example. Let us assume that you are getting a basic salary and dearness allowance of Rs. 50,000. The table below shows you the contribution to the EPF.

Employee’s Contribution	Rs.
Employee’s contribution towards Employee Provident Fund (A)	6,000 (12% of Rs. 50,000)
Employer’s contribution towards Employee Provident Fund (B)	1,835 (3.67% of Rs. 50,000)
Employer’s contribution towards Employees’ Pension Scheme (C)	4,165 (8.33% of Rs. 50,000)
Employer’s contribution towards Employees’ Pension Scheme under the Rs. 15,000 wage ceiling (D)	1249.5 (8.33% of Rs. 15,000)
The contribution made in excess of the wage ceiling limit by the employer (E = C - D)	(4,165 - 1249.5) = 2915.5
Excess employer contribution to the employee provident fund (F = B + E)	1,835 + 2915.5 = 4,750.5 = 4,751
Total contribution by the employer and the employee towards employee provident fund (A + F)	(Rs. 6,000 + Rs. 4,751) = 10,751

Note: According to the EPF rules, the contributions done by the employer are payable on a wage ceiling maximum of Rs. 15,000. But, the contribution can also be made on higher wages (i.e. more than Rs. 15,000) by giving a joint request from the employee and employer as Para 26(6) of the EPF scheme necessitates. However, the employer must pay administrative charges for the higher wages.

How To Compute The EPF Interest Rate?

The EPF interest is calculated at the end of the month and credited to your account at the end of the financial year - 31st March. At present, EPF offers an interest rate of 8.15% p.a. So, you will earn a monthly interest of 8.15% p.a./12 = 0.6791% on your balance.

Let us now understand what EPF interest calculation is with an example

Example:

Consider that Mr. X earns Rs. 40,000 monthly (Basic plus dearness allowance). In this case, the EPF interest will be computed as follows.

Employee contribution to EPF	Rs. 4,800 (12% of 40,000)
Employer contribution to EPS	Rs. 1250
Employer contribution to EPF	3550 (Rs. 4,800 - Rs. 1250)
Total contribution in the first month	Rs. 8,350 (Rs .4,800 plus 3,550)
EPF interest in the first month	##Nil
Updated balance at the end of the first month	Rs. 8,350
Total contribution in the second month	Rs. 8,350
Cumulative EPF balance at the end of the second month	16,700 (Rs. 8,350 + 8,350)
EPF interest in the first month	113.4097 (Rs. 16,700 * 0.6791%)
Updated balance at the end of the second month	16,813.4097 (Rs. 16,700 + Rs. 113.4097)

Points to Note:

# Since EPF interest is computed at the month’s end, there will be no interest for the first EPF contribution.
##The maximum limit on employer EPF contribution is Rs. 1,250. In the given example, employer EPS contribution is calculated as Rs.3,332 (Rs.40,000 x 8.33%), but according to EPF rules, it can not be more than Rs.1,250.
The same method is used for successive contributions of the year. The accumulated interest and balance in the account for the previous year get carried forward to the next financial year.
Computing the EPF interest manually is a time-consuming method. Calculation errors might occur. To make it easier, you can use the EPF calculator to estimate the interest.

EPF Interest Rates For The Last 10 Years

The table shows the EPF interest rate for the past ten years including the current interest rate.

Financial Year	Rate of interest per annum
2013 to 2014	8.75%
2014 to 2015	8.75%
2015 to 2016	8.80%
2016 to 2017	8.65%
2017 to 2018	8.55%
2018 to 2019	8.65%
2019 to 2020	8.50%
2020 to 2021	8.50%
2021 to 2022	8.10%
2022 to 2023	8.15%
2023 to 2024	8.25%
2024 to 2026	8.25%

EPF Interest Rate For Inactive Accounts

When no contribution is added to the employee provident fund account for 36 months, it becomes dormant or inactive.
This usually happens when the employee forgets to transfer his EPF account from the old employer to the new one.
From 2016, interest is accrued on the balance amount as per the existing rates even in an inactive EPF account.
Currently, the EPF interest rate is 8.25% per annum.
Your account will not earn any interest once it has become inoperative or after the end of the scheme’s tenure. This means that if you have become 58 years or older and have not withdrawn your EPF balance, then you will not earn interest on the balance anymore.

Tax Benefits on EPF Contributions

You can avail a deduction of up to Rs. 1.5 lakhs under Section 80C of the Income Tax Act of 1961.
You can avail of a tax deduction on the contribution made to the Employee Provident Fund account.
The amount is tax-free if you withdraw it only after 5 years have been completed. But, income tax gets deducted if you withdraw before the completion of 5 years.

FAQs

1. Can I get a loan against my EPF balance?

The EPF scheme contribution is intended to encompass post-retirement needs.However, you do not have to wait until retirement to receive the money. You can take a loan against EPF balance only in some situations such as purchasing a home, educating a child, repaying the home loan, etc. The advances obtained are not subject to repayment conditions like other loans.

2. Can I withdraw my EPF Funds when I am unemployed?

Yes, you can withdraw 75% of your EPF deposit after one month of unemployment. If you are unemployed for two successive months, you can withdraw the remaining 25% of the money.

Write a review