Finance Ministry approves 8.25% interest for EPF accounts
The Finance Ministry has approved 8.25% interest rate for EPF account holders, benefiting more than 7 crore employees in the country. This rate is the same as last year. The decision has been taken on the recommendation of EPFO. An employee will get an interest of ₹8,250 on a ₹1 lakh deposit.
The government has sanctioned an 8.25% interest rate on EPF for 2024-25, benefiting over 70 million employees in the country. This rate matches the previous fiscal year's rate. The Finance Ministry has given final approval following the EPFO's suggestion. An employee with ₹1 lakh in their PF account will earn ₹8,250 in interest by year-end, while ₹5 lakh will yield ₹41,250. Both employees and employers contribute 12% of the basic salary plus DA to PF, with 8.33% directed to the pension scheme and the remainder going directly to the PF account.
In 1952, the interest rate on Provident Fund was 3%. Between 1989 and 1999, it was 12%, but it has gradually decreased since then. For the past seven years, the rate has been under 8.5%, matching last year's rate. This decision follows EPFO's recommendation. An employee will earn ₹8,250 in interest on a ₹1 lakh deposit.
What amount is contributed to the Provident Fund and in what manner?
Both the worker and the company contribute 12% of the basic salary plus DA to the PF. Out of this, 8.33% from the employer is allocated to the pension plan, with the remainder going straight to the PF account. The Finance Ministry has approved this following the EPFO's suggestion.