# Learn How to Calculate Interest on Your EPF Balance

EPF interest: Rate of interest is actually decided by CBT which is a decision making body of EPFO.

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The Employees Provident Fund Organisation (EPFO), in December announced the transfer of interest in the Employees Provident Fund (EPF) accounts of about six crore account holders for the Financial Year 2019-20.

The rate of interest set by the government for Financial Year 2019-20 was 8.5 percent. Rate of interest is actually decided by Central Board of Trustees (CBT) which is a decision making body of EPFO. It is then sent to the Ministry of Finance which approves it.

This is followed by deposit of interest in the accounts of EPFO members.

## How to Calculate EPF Interest

• Suppose basic salary + dearness allowance of an employee = Rs 15,000
• Employee's contribution in EPF is 12 percent of Rs 15,000 = Rs 1,800
• Employers' contribution to EPF is 3.67 percent of Rs 15,000 = 550.5
• Employers' contribution to Employees Pension Scheme (EPS) is 8.33 percent of Rs 15,000 = Rs 1,249.5
• Total contribution to EPF account is Rs 1,800 + 550.5 = Rs 2,350.5
• Contribution to EPF account every month is Rs 1,800 + 550.5 = Rs 2,350.5
Note: The contribution to EPS is limited to 8.33 percent of â‚¹15,000, which comes to â‚¹1,250. Anything above that goes to the EPF account. Also, for those who joined EPFO after September 2014, it is not mandatory to contribute towards EPS.

The amount of Rs 2350.5 will be credited in the EPF account every month. This is the amount for which the interest will be provided for that month.

Taking annual interest rate as 8.5 percent, monthly interest rate will be 0.7083 percent. Same process is followed to calculate interest for the remaining months.

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