The central government has sanctioned an 8.25% interest rate on Employees’ Provident Fund (EPF) deposits for the financial year 2024–25, maintaining the same rate as last year. This decision was initially proposed by the Central Board of Trustees (CBT) of the Employees’ Provident Fund Organisation (EPFO) and was subsequently approved by the Ministry of Finance.

In the previous year, an 8.25% interest rate was applied to a substantial corpus of ₹13 lakh crore, resulting in earnings of ₹1.07 lakh crore. In contrast, the interest rate for 2022–23 was slightly lower at 8.15%, which yielded ₹91,151.66 crore on a fund base of ₹11.02 lakh crore.

This shows that even though the economy has seen ups and downs, EPFO has managed to maintain a steady income and keep the interest rate stable.

How EPF Interest is Calculated

The EPF interest is calculated every month and added to your account at the end of the month. However, it is credited once at the end of the financial year.

To calculate monthly interest:

1. Use this formula:
   (Closing balance × Annual interest rate) ÷ 12
2. The current rate is 8.25%, so divide it by 12 = 0.6875% per month
3. Multiply the monthly closing balance by 0.6875% to get the monthly interest

For example, if your EPF balance is ₹1,00,000 at the end of a month, the interest added for that month would be ₹687.50.

Over the years, all the monthly interests are added up and credited to your EPF account at once, usually towards the end of the financial year.

Understanding EPF Contributions from You and Your Employer

Both employees and employers contribute 12% of the basic salary to the EPF. But not all of the employer’s share goes into the EPF. A part of it is diverted to the Employees’ Pension Scheme (EPS).

Let’s say your monthly basic salary is ₹50,000:

• Employee's contribution = ₹6,000
• Employer's contribution = ₹6,000
  • Out of this, ₹4,750 goes to EPF
  • ₹1,250 goes to EPS

These regular contributions build your retirement savings, and the interest on the balance grows it even more over time.

When Will the Interest Be Credited?

Even though EPF interest is calculated every month, it’s credited only once at the end of the financial year—usually around March or April. So, don’t worry if you don’t see interest being added every month; it will reflect as a lump sum after the year ends.

Read More, EPF ATM Card, Auto Claim Settlement, and More: 5 Changes in EPFO 3.0. 

How to Check Your EPF Balance

You can check your EPF balance using your mobile phone:

1. Missed Call Method
   • Dial 9966044425 from your registered mobile number
   • You will get an SMS on your mobile phone with your balance and last contribution
      
2. SMS Method
   • Send a text message in this format:
      EPFOHO UAN to 7738299899
   • UAN (Universal Account Number) must be active and linked to your mobile and KYC

These services are free and available in several Indian languages, including:

• English
• Hindi
• Punjabi
• Gujarati
• Marathi
• Kannada
• Telugu
• Tamil
• Malayalam
• Bengali

This makes it easy for employees across the country to keep track of their retirement savings.

Conclusion

The EPFO’s decision to maintain the 8.25% interest rate for FY25 provides a stable and predictable return for salaried employees. While interest is calculated monthly, it will only be credited after the financial year ends, so checking your balance regularly is helpful for financial planning. Use the missed call or SMS services to stay updated, and make sure your UAN and KYC details are updated to access these services without any issues.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.