PF interest rate

In this post, we will look at the latest PF interest rate and how the it has changed over  years. Also, we will discuss the detailed procedure of calculating PF interest rate.

[Feb 2018 update]

The Employees’ Provident Fund Organisation (EPFO) has declared that interest will be applicable at the rate of 8.55% for the year 2017-18. This will affect more than 5 crore PF members, who will be getting a lower percent interest than previous year when it was 8.65%(FY 2016-17).

Change In PF Interest Rates Over Years

The PF interest rates keep changing every year. In the below graph, you can see the variation in PF interest rate over the past 5 years.

The latest financial year, FY 2016-17 is the lowest since FY 2012-13 when it was 8.5%. For 2017-18, the interest is to be 8.55%.

Change in PF interest rate over the years (

Calculation of PF Interest Rate

The monthly PF contribution gets accumulated over time in our PF accounts and starts earning interest. In the section, we will see how you can calculate the monthly PF interest.

Let us first know how to calculate interest on EPF contribution.

The calculation of the actual interest received depends upon the salary of an employee and also on the break-up of employer’s PF contribution.

  • Contribution by an employee – Contribution towards EPF is deducted from employee’s salary. This is 12% of the basic salary of the employee.
  • Contribution by an employer -The contribution made by the employer is 12% of the basic salary of the employee. However, this 12% is further subdivided into:
    • Employee Pension Scheme (EPS) – 8.33%
    • Employee’s Provident Fund (EPF) – 3.67%

As we all know, if Basic+DA is less than Rs.15,000, then both employer and employee contribution will be same. If it exceeds Rs.15,000 then you have an option either contribute based on the original amount or restrict the calculations to Rs. 15,000.

Now, let us take an example of Siddharth who has just joined the organization in the month of June at a monthly salary of Rs 12,000(Basic+DA). We will be calculating the interest on his EPF earnings. We can see the monthly deductions and applicability of interest in the given table below.

Month Employee Contribution(12%) Employer Contribution(3.67%) Balance at the end of the month Interest earned
 June 1440  440.4 1880.4 Nil Just joined
 July 1440  440.4 1880.4+1880.4=3760.8 1880.4*8.75%/12=
 August 1440  440.4 3760.8+1880.4=5641.2 3760.8*8.75%/12=
 September 1440  440.4 5641.2+1880.4=7521.6 5641.2*8.75%/12=
 October 1440  440.4 7521.6+1880.4=9402 7521.6*8.75%/12=
November 1440  440.4 9402+1880.4=11282.4 9402*8.75%/12=
December 1440  440.4 11282.4+1880.4=13162.8 11282.4*8.75%/12=
January 1440  440.4 13162.8+1880.4=15043.2 13162.8*8.75%/12=
February 1440  440.4 15043.2+1880.4=16923.6 15043.2*8.75%/12=

(Total EPF at the end of the year)

12960 3963.6 16923.6+1880.4=18804 493.58

So, in the example above, the total interest that Siddharth received for his EPF contributions from June to March comes out to be Rs.493.58.

This is how interest on EPF is calculated. It is calculated for every month and given at the end of the financial year.


  • The employer shows the EPF contributions with respect to the salary due.
  • Interest amount received on EPF is rounded off to the nearest point before being credited to your EPF account.
  • In the unfortunate event of a death of an employee, the interest is payable till the month preceding the month in which death occurred.

So, this is it regarding the detailed procedure of calculating PF interest rate and change in interest rates. We hope you found it helpful.

If you have any doubts or queries kindly drop them in the comment section below.

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4 thoughts on “Latest PF interest rate & its procedure to calculate

  1. To which period is the EPF interest announced in feb 2018 (8.55%) applicable? Is it retrospectively applicable from Apr 2017 to March 2018? If so members who would have retired in say Sept 2017 would have their interest calculated at what rate? It would not have been 8.55% as it was announced in Feb 2018.

    1. Hello Sir,
      For the FY 2017-18 the interest will be calculated on 8.55%. So for a person who retired in Sept 2017, it would be the same i.e., 8.55%.

    1. Dear Sir,
      PF is applicable at 12% on your monthly BASIC + DA. Employer and Employee will be contributing equally to this.
      When computing interest, the declared rate will be applicable on whole of employee share and 3.67% of employer share
      i.e. if every month you contribute Rs. 1000 your employer too will contribute Rs. 1000. The interest will be calculated on 1000+367=1367.

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