GUIDESPERSONAL FINANCE
EPF Interest Rate Explained: A Guide for Every Salaried Employee
4 MIN • 
LAST EDITED BY ANKANA GHOSHAL ON SEPTEMBER 12, 2025.
LAST EDITED BY ANKANA GHOSHAL ON SEPTEMBER 12, 2025.
GUIDES LAST EDITED BY ANKANA GHOSHAL ON SEPTEMBER 12, 2025.
Your Employees’ Provident Fund (EPF) isn’t just any account — it’s an avenue for long-term wealth creation. Every month, a slice of your salary gets tucked away, quietly compounding into a more significant amount, ideal for your golden years. And the magic ingredient? Interest. It’s what keeps your money multiplying without you lifting a finger.
But here’s the catch — this interest isn’t fixed. It changes, influenced by economic shifts, government policies, and investment returns. So, what’s the EPF interest rate for 2024, and how does it impact your money? Let’s break it all down!
The EPFO declared an interest rate of 8.25% for the financial year 2023-24. This rate applies to both the employee and employer contributions in your EPF account.
But how does this compare to previous years? Here’s a quick look:
| Financial Year | EPF Interest Rate |
| 2023-24 | 8.25% |
| 2022-23 | 8.15% |
| 2021-22 | 8.10% |
| 2020-21 | 8.50% |
| 2019-20 | 8.50% |
While the rate has slightly fluctuated over the years, EPF remains one of India's most secure, long-term investment options for salaried employees.
The Employees' Provident Fund Organisation (EPFO) determines the EPF interest rate annually. The rate is based on market conditions, investment performance, and surplus availability.
The EPFO's Central Board of Trustees (CBT) reviews the rate at the end of the financial year and consults with the Ministry of Finance and other stakeholders. The rate is applied to all EPF contributions made during the financial year.
The EPF interest rate isn’t just randomly decided — several key factors influence it.
EPFO’s Investment Returns: Your EPF contributions don’t just sit idle. The EPFO invests these funds in government securities, corporate bonds, and other safe financial instruments. The returns from these investments determine how much interest EPFO can offer. Higher investment returns = Higher EPF interest rates.
Economic Indicators: Factors like inflation, GDP growth, and overall market conditions play a crucial role. If inflation rises significantly, the actual value of your EPF savings could drop, forcing the EPFO to adjust rates accordingly.
Government Decisions: The final interest rate isn’t solely EPFO’s call. The Finance Ministry reviews and approves the proposed rate based on economic priorities, ensuring it aligns with national financial goals.
Fund Surplus: If the EPFO generates more income than expected, it may declare a higher interest rate for members. Conversely, if investment returns are lower, the rate could be reduced to maintain financial stability.
Unlike your regular savings account, where interest is credited monthly or quarterly, EPF interest works differently. Here's how:
a. Monthly Accrual: Interest is calculated based on each month's closing balance.
b. Year-End Crediting: Although interest is accrued monthly, the total gets added to your EPF balance only at the end of the financial year.
Example Calculation:
Let's say you have ₹10 lakh in your EPF account.
a. At 8.25% interest, your annual earnings would be ₹82,500.
b. This amount is added to your balance at the end of the financial year, increasing your future earnings through compounding.
This compounding effect means that over 10-15 years, your EPF savings can grow significantly, making it a crucial component of your retirement plan.
If you are planning to withdraw the money, check the EPF Withdrawal rules 2025.
Read how to calculate the interest rate on your EPF contributions.
A higher EPF interest rate means your retirement savings grow faster, helping you build a bigger corpus over time. Let’s see how:
| Year | Balance | Interest Rate | Interest Earned |
| 2024 | ₹10,00,000 | 8.25% | ₹82,500 |
| 2025 | ₹10,82,500 | 8.25% | ₹89,306 |
| 2026 | ₹11,71,806 | 8.25% | ₹96,466 |
By the end of three years, your savings would have grown by nearly ₹2 lakh, all thanks to compounding. Imagine the impact over 20-30 years!
*Interest Rates have been constant for 2024-2026 based on assumption for illustration purpose!
While EPF interest rates have fluctuated, they’ve consistently remained above most fixed deposits (FDs) and savings accounts. Historically, the highest-ever EPF interest rate was 12% in the early 1990s, while the lowest was 8.10% in 2021-22.
Despite recent reductions, EPF continues to be a safe, tax-efficient investment compared to other fixed-income options. Want to see an estimate of your EPF funds? We’ve built an intuitive and free tool for you to estimate a total retirement corpus through an EPF Calculator!
| Feature | PPF | EPF | NPS |
| Managed by | Government Employees' Provident Fund Organisation | (EPFO) Government-regulated | PFRDA |
| Interest Rate | 7.1% (fixed) | 8.25% (2023-24) | Market-linked returns |
| Risk Factor | Low (sovereign guarantee) | Low (fixed returns) | Moderate (market-linked) |
| Lock-in period | 15 years (partial withdrawal after 5 years) | Till retirement (partial withdrawal allowed under conditions) | Till retirement (partial withdrawal allowed after 60 years, some flexibility in Tier II) |
| Tax benefits | Contributions up to ₹1.5 lakh under Section 80C, tax-free interest and maturity amount | Employee contributions qualify for 80C deductions, interest is tax-free until withdrawal | Contributions up to ₹1.5 lakh under 80C + additional ₹50,000 under 80CCD(1B), partial taxation on maturity |
| Suitability | Best for risk-averse investors seeking stable, tax-free returns | Best for salaried employees needing a mandatory retirement corpus with employer contributions | Best for those willing to take some risk for higher retirement returns |
Here’s your expanded version with clear, factual explanations:
Monitor Your EPF Contributions: Keeping a close eye on your EPF contributions ensures that both deposits (you and your employer’s) are being made correctly. You can check your EPF passbook online via the EPFO Member Portal to verify monthly contributions, interest accumulation, and any deductions from your account.
Consider the Voluntary Provident Fund (VPF): If you want to increase your retirement savings, you can opt for VPF, which allows you to contribute beyond the mandatory 12% of your basic salary. The interest earned on VPF is the same as EPF and is compounded annually, making it a decent option for long-term wealth accumulation.
Avoid Unnecessary Withdrawals: While you can withdraw your EPF under certain conditions (marriage, hospital needs, etc.), early withdrawals can significantly reduce the power of compounding and impact your retirement savings. If you withdraw before completing five years of service, the interest earned is taxable, and you may also lose out on long-term benefits.
Stay Updated on EPF Interest Rates: EPF interest rates are revised every financial year and announced by the EPFO’s Central Board of Trustees. The current interest rate is 8.25% for FY 2023-24, and tracking these updates helps in financial planning and maximising your returns.
Your EPF account isn’t just another salary deduction — it’s an investment towards your golden years. Whether you’re planning for retirement, building a financial cushion, or looking for a secure savings option, the EPF interest rate plays a key role in determining how much you accumulate over time.
While the interest rate for 2024 of 8.25% may not be the highest in history, it still outperforms the traditional savings accounts and most FDs, making EPF one of the most reliable long-term investment options available.
So, the next time you see that EPF deduction in your payslip, remember—it’s not an expense, but a step towards financial freedom.
For the financial year 2023-24, the EPF interest rate is 8.25% as declared by the EPFO. (Employees' Provident Fund Organisation)
EPF interest is calculated on a monthly running balance basis but credited to the account annually. The interest is applied to the closing balance of the previous month.
The interest is usually credited at the end of the financial year (March 31st). However, it may take a few months for the amount to reflect in the passbook.
Yes, EPF continues to earn interest for up to 36 months after the last contribution. After that, the account becomes inoperative, and interest is not credited.
The EPFO credits interest annually, so there may be delays in updating the passbook. If it doesn’t reflect after a few months, employees can raise a grievance on the EPFO portal.
EPF generally offers a higher interest rate than bank fixed deposits (FDs) and the Public Provident Fund (PPF). For instance, the PPF interest rate is 7.1% for 2023-24, while EPF offers 8.15%.
Interest is calculated until the last day of the preceding month before withdrawal. If the claim is processed after the 25th of a month, interest for that month is also added.
Yes, the interest rate is revised annually by the EPFO Central Board in consultation with the government. It is based on returns from EPF investments.
Yes, the EPFO interest rate was credited for 2024 at a fixed interest rate of 8.25%.
EPF contributions can continue after 60, but pension contributions stop at 58. Deferring the pension until 60 can increase the amount.
The maximum pension available under the Employees' Pension Scheme (EPS) is ₹7,500 per month. This amount is calculated based on the current wage ceiling of ₹15,000.
Yes, you can withdraw your entire PF amount after five years of continuous service. You can withdraw a partial amount from your employee provident fund account before its maturity (except in the case of unemployment) under certain situations. You can withdraw up to 75% of the funds if you are unemployed for at least 1 month and the balance amount if you are unemployed for 2 months or more.
A 10-year pension guarantee ensures that pension payments will be made for at least 10 years, even if the pensioner dies; the beneficiary will receive payments for the remainder of the 10-year term.
