8.25% EPF interest for FY25 finalised, check its impact

According to a PTI report, the central government has approved an interest rate of 8.25% for Employees' Provident Fund (EPF) account holders for FY 2024-25. The interest rate has been ratified following the EPFO's recommendation to the central government.

With this official confirmation, the EPFO can now start the process of crediting interest to the EPF account holders. Further, if your EPF account is held with an exempted trust, then the EPF trust can also follow the process of crediting interest on balances held during the financial year 2024-25.

ET Wealth online tells you how much interest you will get on your EPF balance, when the interest will start reflecting in your EPF account, and if you lose any interest on the EPF account due to a delay in EPF credit.

How much EPF interest will be credited to your account?
Para 60 of the EPF scheme 1952 defines the rule for calculating the interest for the EPF account. As per the scheme rules, interest is calculated on the monthly running balance and is credited at the end of the financial year.

To know how much interest will be calculated on your EPF account balance, it is important to know your and your employer's contributions to the EPF account.

Here is an example to understand this. Suppose your EPF balance is Rs 5 lakh on April 1, 2024. This includes previous EPF contributions and interest earned on them. During the FY 2024-25, your basic monthly salary was Rs 50,000. As per the EPF scheme rules, an employee contributes 12% of the basic salary to the EPF account, and the employer also makes the matching contribution.

Hence, you will deposit Rs 6000 per month. Your employer will also make a matching contribution of Rs 6000. However, the full amount will not go into your EPF account. Out of the employer's contribution, 8.67% will go to the Employees' Pension Scheme (EPS) typically with a limit of Rs 1,250 per account, and the balance will go to the employee's EPF account. Your employer's monthly contribution to the EPF account will be Rs 4,750.

The interest accrued to your EPF account varies monthly. This will be calculated as follows:

For FY 2024-25, the interest of Rs 47,014.69 will be credited to your EPF account.
When will the EPF interest be credited to your EPF account?
Crediting of EPF interest generally takes a long time. Usually, EPF interest is credited to the latter part of the year. EPF account holders should check their accounts to know the status of the interest credited to their accounts.
Generally, logging in to the EPF Passbook website is difficult. If you are facing issues logging in to your EPF account, you can use alternative methods to check the EPF balance.

Also Read: EPF Passbook website not working? Check EPF balance via missed call and SMS
Do you lose any interest if there is a delay in the crediting of interest?
In previous instances, the Employees Provident Fund Organisation (EPFO) has clarified that there would be no interest loss for the EPF members.

EPFO amended the rules in November 2024 to minimise the loss of interest to EPF members in case of EPF claim settlement. As per the new rules, an EPF member will get the interest on the EPF balances till the date of settlement instead of till the preceding month earlier.