The Employees’ Provident Fund Organization (EPFO) has announced a 0.05% increase in the EPF interest rate for the financial year 2022-23.
The new interest rate has increased to 8.15%, compared to 8.10% the previous year. The EPFO announced the new interest rate in a circular dated July 24, 2023.
The circular mentions, “The Ministry of Labor and Employment, Government of India has conveyed the approval of the Central Government under paragraph 60 (1) of the Employees’ Provident Fund Scheme, 1952 to credit interest at 8.15% for the year 2022-23 to the account of each member of the EPF Scheme in accordance with the provisions of paragraph 60 of the 1952 EPF Scheme”.
The EPF is a retirement savings plan in India managed by the EPFO. It is a contributory pension plan in which both the employer and the employee contribute a certain percentage of the employee’s salary.
The interest rate of the EPF is reviewed each year based on the performance of the EPFO investment corpus.
READ| What is EPFO Higher Pension Plan? Eligibility, How to apply?
How to calculate the new EPF interest rate?
EPF interest is calculated each month, but is credited to the account at the end of the financial year. The interest calculation is as follows:
Interest = (EPF account balance * interest rate) / 12
For example, let’s say the employee’s basic salary and hardship allowance is Rs 30,000. Employee contribution to EPF is 12% of salary which is ₹3600.
The employer’s contribution to the EPF is also 12% of salary, but is subject to a maximum of Rs 1,250. In this case, the employer’s contribution to the EPF is Rs 2,350.
The total EPF contribution each month is ₹3600 + ₹2350 = ₹5950.
The EPF interest rate for the 2022-2023 financial year is 8.15%.
Assume that the employee joined the service on April 1, 2022. The total EPF contribution for April is ₹5950. The interest for April is calculated as follows:
Interest = (5950 * 8.15%) / 12 = ₹70.83
Since the employee joined the service in April, there is no interest for the month of April. The balance of the EPF account at the end of April is ₹5,950.
The total EPF contribution for May is ₹5,950. The total EPF account balance as of May is ₹11,900. The interest on the EPF contribution for May is calculated as follows:
Interest = (11,900 * 8.15%) / 12 = ₹84.29
May interest will be credited to the EPF account at the end of the year.
How to check your EPF balance?
To check your EPF balance online, you can follow these steps:
- Go to the EPFO website: https://www.epfindia.gov.in/
- Click Services
- Click the “Member Book” tab.
- Enter your UAN (Universal Account Number) and password.
- Click the Sign In button.
Here are the steps to view your EPF balance on the Umang app:
- Download and install the UMANG app on your phone.
- Open the UMANG app and register with your mobile number.
- Tap the “Employee Provident Fund” (EPFO) option.
- Click the “View Notebook” button.
- Enter your UAN and click “Get OTP”.
- Enter the OTP received on your registered mobile number and click “Login”.
- Your EPF book and balance will be displayed on the screen.