How to Calculate EPF Contribution and Interest

Dear Ladies, understanding your EPF, i.e., Employees’ Provident Fund, is super important. It’s not just a deduction from your salary; it’s an investment plan primarily designed for your retirement in the future. Many women ignore it because it seems complicated, but trust me, once you know the basics, you’ll feel more confident and in control of your finances and get to understand in detail how to calculate epfs.

Let’s break it down together, how to calculate EPF contribution in India in a way that’s easy to understand. Whether you’re working in a small company or a big firm, EPF is your friend in building a secure retirement.

What is EPF?

EPF is a savings scheme where both you and your employer contribute every month. This fund grows with time and earns interest. When you retire, this is where your investments in EPF will help you.

How Much Do You Contribute to EPF?

• Employee i.e., you contribute 12% of your basic salary + DA (Dearness Allowance) every month.
• Your employer also puts in 12% of your basic salary plus DA into your EPF scheme, just like you do. But here’s how your employer’s share is split:
  • 8.33% of their contribution goes into a pension fund (EPS) to help you after retirement, and the remaining 3.67% goes directly into your EPF savings account.
  • If your salary is ₹15,000 or more, the maximum your employer can put into your pension is ₹1,250 per month.
  • So, part of the employer’s money helps build your pension, and the rest adds to your EPF savings.
  • Now let’s see the EPF contribution calculation.
• For Example, let’s say your basic salary + DA is ₹25,000. 

Particulars	Amount	Explanation
Employee’s EPF Contribution	₹3,000	12% of ₹25,000
Employer’s Contribution to EPS	₹1,250	8.33% of ₹25,000 = ₹2,082, but capped at ₹1,250
Employer’s Contribution to EPF	₹1,750	₹3,000 (12% of ₹25,000) – ₹1,250 (EPS part)
Total Monthly EPF Contribution	₹4,750	₹3,000 (employee) + ₹1,750 (employer’s EPF share)

How to Calculate EPF Interest?

EPF interest is revised by the government every year. For Financial Year 2025 (2024-25), the interest rate is 8.25%.

Here’s how it works:

• Interest is calculated monthly but credited annually.
• The EPF interest rate is 8.25% per year. It is calculated every month but added to your EPF account only once a year, on 31st March. Each month, the interest rate used is 0.688%, i.e., 8.25%/12 months.

For Example, assuming the employee joined on 1st April 2025, contributions begin from April 2025.

Month	EPF Contribution	Total EPF Balance	Interest	Notes
April 2025	₹4,750	₹4,750	0	No interest in the first month
May 2025	₹4,750	₹9,500	₹65.36	Interest on ₹9,500 (₹4,750+₹4,750)
June 2025	₹4,750	₹14,250	₹130.85	Interest on ₹14,250 (₹9,500+4,750)
July 2025	₹4,750	₹19,000	₹197.16	Interest on ₹19,000 (₹14,250+4,750)
A similar calculation is done for all other months of the year.

But remember, this interest is added every month to the current balance. So it keeps growing like magic!

How to Check Your EPF Balance?

• Visit https://www.epfindia.gov.in
• Log in with your UAN (Universal Account Number)
• You can also download the UMANG app and check easily

So, you should know your EPF details is your right and your power. It helps you plan for your future better and gives you peace of mind. Take a few minutes today to check your EPF balance. It’s your money, your savings, and your strength.

EPF is one of the investment options to plan for your retirement, but that is not enough if you want to spend your retirement in comfort while maintaining the same lifestyle. You should calculate and plan your retirement and start investing towards it. You can diversify your investments across different asset classes like equity, debt & gold, which can be invested through mutual funds.

You can check out the Lxme app and look for the retirement calculator to calculate how much you need for your retirement. Moreover, you can check out Lxme mutual fund portfolios that are diversified, well-researched, and curated by experts.

You can also check out the blog on problems of working women 

FAQs

Further read:

• EPF Vs. PPF: Which is the Better Option?
• EPF Advance- Should you withdraw from your PF account?
• How to Manage and Improve Your Disposable Income Effectively