How EPF Interest Rate Calculation Works
If your Basic + DA is Rs 20,000 and the interest rate = 8.65%. The monthly applicable interest here will 8.65/12 = 0.721%
Employee contribution to EPF will be equal to 12% of Rs 20,000 = Rs 2400
Employer contribution will be = 3.67% of Rs 20,000 = Rs 734.
Hence, the total monthly contribution in your EPF account will be Rs 2400+Rs734 = Rs 3134 more
Actually govt declares the interest every year and they are computed monthly if i remember it right but against the balance of the end of the year the interest is given and not every month so even though we may be paying like a recurring deposit every month but interest is calculated on the principal at the end of the year amount so we lose lot of money. more
Thank you Mr. Naveen Goel for this valuable information on calculation of EPF which I myself had not remembered now. But the regret is that most of the problem like employees not getting their Funds at the end of the term is because of the failure of the employers either not depositing their contributions or not giving timely clearances. more
Hence monthly interest will be 3134*0.721%= rs 22.60 the interest will be calculated every month but deposit will be made end of financial year more