EPF Interest Rate

The Employees’ Provident Fund (EPF) helps salaried employees build retirement savings through regular contributions made jointly by employees and employers. Administered by Employees’ Provident Fund Organisation (EPFO), the scheme operates under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. EPF generally applies to establishments employing 20 or more people, though specified smaller establishments may also fall within its coverage.

Eligible employees typically contribute 12% of qualifying wages, while employers make corresponding contributions according to applicable statutory requirements each month. For eligible balances, the pf interest rate was 8.25% annually during FY 2024-25 and FY 2025-26, supporting long-term retirement growth. For example, Rs. 1 lakh maintained throughout FY 2025-26 would earn approximately Rs. 8,250, before considering withdrawals or monthly contributions. (UPDATED)

Key highlights

• EPF is a mandatory retirement scheme where employees and employers contribute monthly towards long-term savings.
• The EPF interest rate for FY 2025–26 is fixed at 8.25%, reviewed annually by the EPFO.
• Interest is calculated monthly but credited yearly, and dormant accounts after 36 months earn taxable interest.
• Employee and employer contributions vary based on salary, wage ceiling, and establishment type.

• EPF withdrawals are allowed at retirement, after unemployment, or for specific financial needs like medical expenses or home loans.

  
  

EPF Interest Rate FY 2025-2026

EPF interest rate for the financial year 2026 is set at 8.25% per annum. This rate applies to all EPF contributions made between 1st April, 2024 and 31st March, 2026. The EPF interest rate is reviewed annually, and after the EPFO announces the rate for a fiscal year, it is calculated based on the monthly closing balance and then applied for the entire year. The scheme covers all entities employing 20 or more individuals, and certain entities may also be included under specific conditions and exemptions, even if they do not meet the 20-employee requirement.

The newly published interest rates remain applicable for the upcoming fiscal year, starting from April 1st of one year and ending on March 31st of the following year.

Here are key points to remember about the EPF Interest Rate:

• The interest rate of 8.25% is now in effect and applies to EPF deposits.
• While interest is computed monthly, it is credited to the Employees’ Provident Fund account only once a year on March 31st of the respective fiscal year.
• The interest accrued is added to the balance for the following month, i.e., April's balance, and is factored into the interest calculation.
• If no contributions are made to an EPF account for 36 consecutive months, the account becomes dormant or inoperative.
• Employees who have not reached retirement age may still earn interest on their inactive accounts.
• Inactive accounts of retired employees do not accrue interest.
• Interest earned on dormant accounts is taxed at the member's income tax slab rate.
• Employees do not receive interest on contributions made to the Employees’ Pension Scheme. However, after the age of 58, a pension is provided from this amount.

EPF vs. Traditional Savings

Choosing between EPF and traditional savings depends on your financial goals, liquidity needs, and tax planning. EPF is designed for long-term retirement savings, while bank deposits and savings accounts provide easier access to funds. The comparison below highlights the key differences for the current financial year.

Overall, EPF remains a suitable long-term retirement savings option for eligible salaried employees, while traditional savings products primarily support liquidity and short-term financial goals.