PF Interest Rate Increased to 8.25% for 2023-24: Earn ₹8,250 Interest on Rs 1 Lakh Deposit

The government has approved an interest rate of 8.25% on the Employee Provident Fund (EPF) account for the financial year 2023-24. This means that if you have a deposit of 1 lakh rupees, you will earn an interest of 8,250 rupees in one year. Labor and Employment Minister Bhupender Yadav provided this information today (Saturday, February 10).

The Employees’ Provident Fund Organization (EPFO) had declared 8.15% interest last year in March. Over 6 crore employees in the country come under the ambit of PF. Under the EPF Act, 12% of the employee’s basic salary goes into the PF account.

Companies also contribute 12% of the basic salary towards DA over and above the employee’s basic pay. Out of the company’s 12% contribution, 3.67% goes into the PF account, and the remaining 8.33% goes into the pension scheme.

Interest on PF started at 3% in 1952 and has been increasing since then. It reached 6% for the first time in 1972 and then rose to 10% in 1984. The golden period for PF holders was between 1989 and 1999, during which they received 12% interest on their PF. After that, the interest rates started declining. Since 1999, the interest rate has never been close to 10%. It was below 9.50% from 2001 onwards and has been at 8.5% or lower for the past seven years.

Here’s how you can understand the increased interest on PF:

Suppose you have deposited 5 lakh rupees in your PF account. In such a scenario, if the interest rate were to remain at 8.15%, you would earn 40,750 rupees as interest on 5 lakh rupees. However, with the interest rate increasing to 8.25% now, you will earn 41,250 rupees as interest on the same 5 lakh rupees.

The decision to fix the interest rate comes at the end of the financial year. To finalize the interest rate on PF, a meeting of the Finance Investment and Audit Committee is convened. It reviews the accounts accumulated during the financial year. Following this, a meeting of the Central Board of Trustees (CBT) is held. After the decisions of the CBT, approval from the Ministry of Finance is sought, and then the interest rate is implemented for the financial year. The decision to fix the interest rate comes at the end of the financial year.