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I would like to understand how the interest rate for Provident Fund is being calculated.
For better understanding, let me share my PF slip for 2003 - 2004 on which the below details were printed:
* The opening balance is '0' as i joined the company fresh.
* The yearly contribution was Rs 7760.
* The yearly interest rate was 9.5% and the interest earned was Rs 216.
As per the usual calculation, the interest earned should be some where near Rs 700. But i am wondering how just Rs 216 has been calculated.
It'll be really great, if some one help me to understand the logic behind this.
Thx
Rajaram
From India, Madras
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hi Rajaram,

First thing is that, Interest on PF is not 9.5 %. It is 8.5%.

now lets come to your query, first you understand that, employees contribution (means 12%) directly goes in Provident fund a/c. but,

Employer's contribution (13.61%) is divided in to 5 part as mentioned below..

1) 8.33% goes in Pension Fund
2) 3.67% goes in Provident Fund
3) 0.50 % goes in EDLI (Employees Deposit Link Insurance)

rest 1.61 % divided in Admin Charges
1) 1.10% Admin charges on PF A/c
2) 0.01% Admin charges on EDLI a/c

If you see you annual PF slip carefully, So, you will found that, Provident Fund amount details only mentioned in annual slip, it means not mentioned the Pension amount details.

Interest rate of PF is calculate on employees contribution as well as Employer Contribution. So, you are getting the interest on both contribution.

That the reason, it is wonderfull to you, its showing more than you expection. for your information, your some more money (Other than mentioned in annual PF slip) is safe in Pension Fund.

In further you can withdra you PF as well as Pension amount also. but EDLI amount is not be reimbursment, It can be use only, IF you not register in ESIC, & if you meet any accident in further (Sorry to say that), you will be get the benefit of same. EDLI is like a Insurance.

If you want to know any thing else, Please let me know...

Regards,



From India, Mumbai
Here is a simple calculator to know your EPF kitty worth for any given year....:)


Attached Files
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File Type: xls EPF Calculate your kitty for the FY.xls (23.5 KB, 21839 views)

Dear Rajaram,
I think the EPF Dept has calculated your Interest in the right way. I can show you the calculation statement if you provide the following information
1) Your date of Joining
2) Your monthly salary (Basic + DA ) during the slip period
3) Your monthly EPF deduction ( Normally it must be 12 % of your Basic + Da)
Thanks
Jishnu.V.Nair
Tax & EPF Consultant
Kerala
infomanimangalam@gmail.com
From India, Thiruvananthapuram
Dear Jishnu,
Please provide formula for calculation of Interest on Provident Fund on my contact no-9773447965
My contribution to pf was Rs.4326 & employer contr was Rs.1323 I got Int of Rs.130 & 40 respectively for 2006-2007 dt of joining-27.04.06
My basic was
MonthBasic12%3.67%Apr-063464213May-063000360110Jun-063000360110Jul-063000360110Aug-063000360110Sep-063950474145Oct-063950474145Nov-063950474145Dec-063950474145Jan-073950474145Feb-073950474145 36,046 4,326.00 1,323.00
I will be great help
Regards,
Vinayak
From India, Mumbai
Thanks Mr. Devaprasad ! Your spreadsheet gave me results matching exactly with my PF statements. The calculation is crystal clear now. Regards, Gaurav
From United States, Buffalo
Good afternon sir,

This is kiran and i want to know that how can we calculate the total amount of pf of an employee if he attain the age of 58 and want to leave the job from the employment? could you give me an answer with an example?
From India, Mumbai
Hi Rajaram
THe interest for EPF is computed on a reducing balance method
The attached file will compute the same for you
You may use this for your reference
You can change the year or copy paste the entire sheet to another and rename the year
pls mail me at for any clarification
Regards
Jeeva Rajagopal


Attached Files
Membership is required for download. Create An Account First
File Type: xls EPF INT CALCULATION.xls (25.0 KB, 7731 views)

In EPF interest is monthly compounded and round to nearest rupee seperately for both employee and employer contribution. I shall insert an excel sheet w.e.f 16.11.95.
The interest rates are
16.11.95 to 31.3.2000 - 12%
1.4.2000 to 31.3.2001 - 11%
1.4.2001 to 31.3.2005 - 9.5%
1.4.2005 to 31.3.2010 - 8.5%
1.4.2010 onwards - 9.5%
Salary Ceiling limits
16.11.95 to 31.5.2001 - 5000
1.6.2001 onwards - 6500
Extend the rows as per requirement and enter applicable salary, interest rate & ceiling limit.
Abbas.P.S
From India, Bangalore

Attached Files
Membership is required for download. Create An Account First
File Type: xls EPF Statement.xls (19.5 KB, 1223 views)

Please let me know the process of calculation of interest on PF. Is it calculated like interest on RD or interest is calculated in the last of the financial year on total sum depoisetd in PF a/c.
From India, Ranchi
Dear Vishal, I have already posted that PF interest is monthly compounding. . . . . . . . Abbas.P.S
From India, Bangalore
Hi,
I have been struggling to transfer my PF since Oct 2000.
Could you please provide me the EPF interest rate from 2000 to 2012? I am creating my own calculation sheet would like to check my balance?
Please help.
Regards
Hari
C V Haribabu
From India, Bangalore
Dear Professionals,
Deviprasad's sheet has helped me to understand how the PF Interest part will be calculated. But Interest part will be calculated in a pro - rata basis? for an example if an employee joins on 13th of Feb, will the Interst part calculate in a pro - rata basis? Pls confirm.
Regards,
Kamesh.
From India, Kakinada
good evenig sir please divide my gross salary of rupees 9000 basic salary=? HRA=? Medical reimbursement=? Conveyance Allowance=? Special allowance=? Provident Fund=? ESI=? Gratuity=?
From India, Hyderabad
In my EPF account the principal is 80000 accumulated by me and employer in one year,and no other contribution in my pf account.
According to pf interest rate 8.65 my principal amount is double in how many time.
From India, New Delhi
Dear sir, My name is m.pradeep kumar please explain to the esi calculation .my ctc is 282000
From India, Chennai
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