Do you know how your Employees’ Provident Contribution will earn interest rate? How the interest will be calculated on your as well as your employer contribution? Let us discuss this issue today.
Latest News-
- New EPF Withdrawal Forms-Withdraw without employer signature
- Check EPF (Employee Provident Fund) balance through Mobile Phone SMS
- EPF Universal Account Number (UAN)-What it is?
Before proceeding, let us first understand how and in what way EPF contribution will be considered for interest rate calculation. We all know that if BASIC+DA is less than Rs.15,000 (Effective from 1st September 2014) then both employer and employee contribution will be same. If it is more than Rs.15,000 then you have option either to have this investment or opt out of this investment. Below table will give you how your as well as employer contribution will be distributed if your salary is less than or equal to Rs.15,000. Salary for this purpose means Basic+DA.
But if it is more than Rs.15,000 then it depends on the employer decision like how much your employer is also contributing. Below are a few options which usually followed. But do remember that whatever below option your employer may choose but EPS contribution is fixed as 8.33% and other contributions may change according to consideration.
Option 1-Employer may contribute equal to your contribution.
Option 2-Employer may restrict its share to Rs.15,000 only but your share as 12% of salary.
Option 3-Employer may restrict your as well as its contribution to Rs.15,000 only.
Coming back to the interest calculation method on EPF, lot of EPF members not aware that for EPF accounting year starts from March and ends on February but interest will be credited on April every year. EPF interest is yearly compounding but use the method of “Average Monthly Balance” calculation method. Let us take an example that Mr. Ajay joins the company on 1st June of 2012 with a salary (Basic+DA) as Rs.6,500 with no prior EPF balance in this account. I considered the current EPF interest rate of 8.50% for 2012-13. Below is the table which illustrates the calculation method.
The above balance at year end of Rs.9,431 will be considered as a balance for beginning of account year i.e. for March 1st.
A few points to be noted–
- Contributions will be shown by your employer based on the salary due. For example, September month salary will be payable on October. So the September month contribution will be shown as a contribution against October but not in September. Whether the payment will be in October month or not.
- Interest will be rounded off to a nearest rupee.
- In case of death claims, interest should be restricted to the month preceding the month in which death occurred.
Note-Do you know these recent changes in EPF rules? If no then visit “Employee Provident Fund (EPF)-Changed rules from 1st Sept 2014“.
View Comments (965)
Hello Sir,
I have changed job in middle of financial year (September) and I got PF account (balance & interest so far )transferred to new PF account on January. Since there is some interest also transferred on January, will there be interest paid for rest of the months (Jan,Feb,Mar) after the end of financial year.
Thanks,
Viswanath
Dear Viswanath,
Yes.
Dear sir, i worked straight 7years in A company and getting compounded interest which is the basis of PF account. Now i am changing to B company then if i will tranfer my balance from A to B then it will assume as a opening or tranfer balance , so when next year calculation happen then IS IT calculate with all past 7 years compoundedly OR just start as a new year ... IF it consider as a new year this means system picks Simple interest ........If it not considered as compounded then i think i will leave my balance in previous company only to get benefit.of compound interest for all 7 years.. Is this a right thing ?
Dear Sudhanshu,
Compounding works on all your balance. So no worries.
EPF withdrawal
================
I have a query related to EPF withdrawal. I worked in a company for 11 years and then left without withdrawing my EPF and EPS. This was May 2015. I haven't worked for any other company since. I am right now 55 yrs old (as on Dec 2020). The EPF was held all these years in a private trust run by my last employer. I am confused about some of the rules around EPF a/c becoming inoperative. Please help me understand the following:
a) If I continue to keep this EPF a/c till my age of 58, will I get interest every year for the next 3 years?
b) If someone is 55 yrs of age (and is not working) and does not withdraw the EPF in the next 36 months, the EPF a/c becomes inoperative after attaining age of 58 yrs. I read this somewhere. But I have my EPF account since May 2015 (without any contributions as I am not working since that time) so will my 36 months get counted from May 2015 onwards?
c) But I have got interest in my EPF a/c till Apr 2021, hence it is not yet inoperative. Question is will it become inoperative any time now or in near future? I want to keep the account till I attain the age of 58 yrs and then withdraw the whole amount. Or the a/c will not become inoperative till I attain age of 58 yrs.
Please reply soon.
Thanks so much.
Mukul.
Dear Mukul,
Refer my post "Old Inactive EPF Account – Should you withdraw or continue?".
Thanks Basu.
to my c) question above, my EPF a/c will not become inactive till I complete 58 yrs. Is that correct interpretation?
Best,
Mukul.
Dear Mukul,
Yes, but interest is taxable for any such non-contributory accounts.
Dear sir,
I claim my total pf and pension withdrawl request on 4th march 2021, can I get my interest for this year 2021.
I left job on 30 Oct 2017. Is this account will inoperative from 2020 or I can get interest for year 2020 - 21.
Please suggest or I have to cancel my claim for getting interest of this year.
Dear Tapan,
Yes, you will get it. But it is taxable.
Dear Sir, I worked for a company A from April 13 to April 18. i was not on job after that and i didnot withdraw the epf amount.
in Sept 2019, i joined a company B under which pf is getting deducted. Both accounts are under same UAN.
For the company A, i understand that after 36 months interest will not get credited so i am trying to with draw it as i didnot transferred.
Questions:
1.) Can i withdraw the money before or after account getting inoperative (Company A)?
2.) If i transfer amount to company B, then will the interest start coming for Company A epf amount even after 36 months are over.
Kindly let me know what would be best way to get money without loosing interest
Dear KK,
If both the accounts are under a single UAN and you are still working means you are not allowed to withdraw but can only transfer.
Thanks Sir,
I also bought one property this month on my wife's name. Can i withdraw some percentage for house/property bought scenario.
Also, pls tell will i be getting interest on transferred amount to Company B even after completing 36 months.
Thanks a lot again.
Dear KK,
If you already owning a house and purchasing one more means it is not allowed.
Thanks Sir,
Awaiting your response for below.
Also, pls tell will i be getting interest on transferred amount to Company B even after completing 36 months given that there is a gap between Company A and company B.
Dear KK,
Refer the above post properly.
Hello,
What is OB Adjustment- ( AUTO APPENDIX BACK PERIOD )- IPR(Back Period) and OB Adjustment- (INTEREST )- IPR(Back Period) ?
Is this kinda deduction that will happen once I withdraw my PF and pension? Your reply would mean a lot.
For me also around 50+ transaction happened recently .Around 35K deducted
Particular: B Adjustment- ( OTHER_INTEREST )- INT AMT AUTO ADJ TRRNO #~#3101602008775 MMYYY:22016 REJECTED AA EMP REQUEST .
@Pooja Did you get any solution for this.
Dear Jajati,
Rather than asking Puja, approach the regional EPFO or raise an issue with EPFO Grievance Cell :)
Same here my last org PF amount of 40K got all deducted and now my previous balance is -7K. they deducted around 47k in 50+ transactions
SAME HERE , i also got same thing , what is the solution for this, i lost 1.5L.
Dear Manish,
Refer the reply.
Dear Pooja,
I am also hearing it first time!!
hello sir,
First, I want to congratulate you for the rise.
Second, plz try to keep doing such good job as people in india need it always.
Third , we know u r a busy person bt try to revert the queries soonest as it is all finance nd it should be resolved in time line of the due time the person has. ?
KEEP RISING BY HELPING...
Dear Baldeep,
Thanks for your appreciation :)
If the contribution of 5 months of year 2010-11 was filed on 05-08-2017, then calculation of interest will be done from 2010-11 or from 05-08-2017? please answer.
Dear Sir,
I see there is some discrepancies in interest calculation in my PF account. Could you please let me know who should I contact to get this clarified/resolved. I don't see any such category in their grievance section.
Thanks.
Dear Krishna,
Approach the regional EPFO.
Hi Basava,
I have quit my job in 2017dec after working 20 months and moved to new one in March '18.
Got a new account of pf under same UAN.
When I have seen passbook,
Previous account has no interest amount added for both the years(16-17,17-18)
Current one is updated with one interest amount addition for 18-19, which is calculated based on 18-19 contributions. However the interest rate is 5.54% ( cumulative calculated).
I have three questions.
1. Is there anything as a clause of not getting interest?
2. Will the accumulated amount in first account yield interest every year even after moving to New job?
3. Will interest % change as per employer? if not can the reduced interest can be put in grievance?
Sorry to bother you, but I have seen you responding to all queries. Which is a great act of helping people.
Cheers and TIA.
Dear Kalyan,
1) NO.
2) Yes.
3) It is uniform.
Thank you.
Have raised a grievance.
Let's hope the result would be positive.