EPFO Interest 2024-25: The Employees’ Provident Fund Organization (EPFO) has started depositing interest money in PF accounts for the financial year 2024-25. This time the central government has fixed the interest rate at 8.25%. This rate will be applicable to about 7 crore subscribers of EPFO. This interest received on EPF is tax-free and is considered a safe investment option that gives strong returns in the long run.
How much interest will come in PF account?
How much interest you will get in your PF account depends on the amount present in it. If you have ₹ 1 lakh in your PF account, then you can get an interest of ₹ 8,250 at an annual rate of 8.25%. You can see the calculation of interest on PF balance of ₹ 1 to ₹ 15 lakh in the table given below.
| epf balance | Annual Interest |
Monthly Average Interest
|
| ₹1 Lakh | ₹8,250 | ₹687.50 |
| ₹3 Lakh | ₹24,750 | ₹2,062.50 |
| ₹5 Lakh | ₹41,250 | ₹3,437.50 |
| ₹10 Lakh | ₹82,500 | ₹6,875.00 |
| ₹15 Lakh | ₹1,23,750 | ₹10,312.50 |
Note: These figures are given assuming static corpus. If an employee contributes to PF every month, then the actual interest may be higher due to compounding.
When and how is interest received on PF?
EPF interest is charged on the closing balance of every month, but it is added to your account only once a year. This time is usually after the financial year, when the interest rate is approved by the government. Interest on PF account is calculated on the basis of compounding. This means that interest is added on the increasing balance every month.
Is there tax on interest received on PF?
If an employee contributes up to ₹ 2.5 lakh to the PF account in a financial year, then the interest received on it will be tax free. The employer’s i.e. your company’s contribution is not counted in this. If an employee contributes more than ₹ 2.5 lakh in a financial year, then the interest received on the additional amount will be taxable. In the case of government employees, this limit is up to ₹ 5 lakh.
Is EPF beneficial from investment point of view?
- 8.25% interest rate is higher than bank FD and PPF in the current market.
- This is a safe option due to government guarantee and tax exemption.
- EPF is a strong long term plan as a retirement fund.
EPF not only provides a financial cushion for retirement, but due to tax exemption and stable interest, it is a very reliable saving tool for the middle class salaried class. EPFO now offers complete transparency and easy balance check facility through UAN portal. This allows you to keep a complete track of your investments.
