# EPF Interest Rate 2020-2021

EPF Interest Rate: EPFO( Employees Provident Fund) is a saving scheme for the benefits of employees after retirement. In this fund, both employees and employers have to contribute some amount to maintain it. This fund is supported by Employees provident fund organization ( EPFO)

## According to the current norms, an employee has to put up 12% of his/ her basic pay and dearness allowance to this fund. epf interest rate

### An employer( the company/firm/institution/PSU) has to give a total of 13.61% of the salary in this scheme in which 3.6% has to be shown in the EPF and fixed 8.33% has to be contributed in employees pension scheme.​

This scheme is very beneficial for the employees working in the organized sector. It is an obligatory scheme by the government to provide benefits to people.

It also helps you in saving taxes, and this makes the credit and loan facilities more accessible to them.

The interest rates of EPF are mutually decided by the ministry of finance and the EPFO Central Board. This rate has to be reviewed every time at the end of a fiscal year.

For 2019-2020 EPF interest rates are 8.50% per annum. This interest rate is compounded at the end of every month, so the monthly interest rate is 0.70%.

The contributed amount is compounded every month but deposited in the account at the end of the financial year. This interest rate is exempted from any taxes.

### If we consider an example for the interest calculation, you can understand Better, and the model is given below.

Suppose the salary of a person is rs 50,000 per month along with dearness allowance, so an employee will contribute 12% of that amount in EPF that is rs.6000.

The employer contribution is 8.33% of 50,000 that is Rs. 4165 that goes in the employee pension fund.

Employer contribution in EPF IS 3.67% of 50,000 that is rs.1835, and it also added some additional amount of 1.61% is also added to this that is 805.​

Hence the total EPF will become Rs. ( 6000+4165+1853+805)= Rs.12823

EPF interest rate = 8.5% /12 = 0.70%.

Hence the interest gained every month for a person whose monthly basic salary+dearness allowance is Rs. 50, 000 = 0.70% of 12823 that is = Rs.89.76.

### Interest Rates for inactive or Inoperative EPF accounts-

If the account of the person will become inactive, then that employee will not receive any interest on the EPF. The charges which are completely passive for more than the duration of three years the claim will be paid as per the current year interest rates.

The account can be inactive in the case of the demise of the employee.

If the employee shifts to another country, then his/her account will be considered as inoperative.

Suppose the employee has quit the job and didn’t apply for the EPF withdrawal within three years if the employee has completed the age of retirement after 58 years.

The maximum salary or wages of the employee for availing EPF scheme should be Rs.15000. An employee can also contribute a higher percentage of their wages in the EPF, but the employer will not be bound to do that. In case an employee wants to give higher than both employer and employee has to submit a joint request.

## EPF Calculator ( Employees Provident Fund)

There is a constant demand from the worker section for a surge in the interest rates of EPF. Still, the central government has decreased interest rates for the fiscal year 2019-2020 from the previous years due to the present slowing economic conditions and pandemic.