PF Interest Calculation: In the two-day meeting of EPFO, it has been decided to reduce the PF interest rate. It has been reduced from 8.5 percent to 8.1 percent now (pf interest rates slashed from 8.5 to 8.1%). Interestingly, this rate is the lowest in the last 44 years. Let us understand what will be the effect of this deduction on you.
New Delhi: EPFO has given a big blow to about 6 crore employees of the country before Holi. PF interest rate has been reduced from 8.5% to 8.1% (pf interest rates slashed from 8.5 to 8.1%). That is, the interest you get on PF has been cut by 0.40 percent. This is the lowest interest rate in the last 44 years. In 1977-78, the EPFO had given 8 per cent interest and thereafter it was 8.25 per cent or more. Let us know that due to the reduction in the interest rate, how much will be the effect on the interest you will get on PF (PF Interest Calculation).
2 thousand loss on 5 lakh
Suppose you have 5 lakh rupees deposited in your PF account till March 2022. At the rate of 8.5 per cent, you would have got an interest of Rs 42,500 on Rs 5 lakh. At the same time, at an interest rate of 8.1 percent, you will get interest of only Rs 40,500. That is, you will have a direct loss of 2 thousand rupees. On the other hand, if this interest rate remains the same in the coming years as well, then your loss will also increase. If interest rates fall further, be prepared for more losses.
Understand how much PF money is deducted from salary
12 per cent deduction on the salary of an employee is made for the EPF account. If we talk about the employer, 8.33 percent of the deduction made by him goes to EPS (Employees Pension Scheme), while the remaining 3.67 percent goes to EPF. At the same time, the entire 12 percent deducted by the employee goes to EPF.
When it comes to salary, we consider a salary of Rs 50,000 as standard. If we look at the new wage code, then half of the total salary is the basic salary (25 thousand). In such a situation, the calculation of PF deducted on salary and interest on it will be something like this.
What is the total contribution in EPF and EPS
- Contribution (12%) on behalf of the employee to EPF – Rs 3000
- Contribution to EPF by the company (3.67%) – Rs 918
- Contribution on behalf of the company to EPS (8.33%) – Rs 2082
- That is, if your basic salary is 25 thousand rupees, then the total contribution of both the company and the employee in the EPF every month will be around Rs 3918. At the same time, you will get Rs 2082 every month in the EPS account.
How much interest was available earlier, now how much will you get
- If you look at the earlier, then at the rate of 8.5 per cent per annum, you used to get interest on Rs 3918, which works out to Rs 333.03. That is, annually you used to get an interest of Rs 1,875.61 at the rate of compound interest of 8.5 per cent.
- Now the PF interest rate has been reduced to 8.1 percent. That is, you will get an interest of Rs 317.35 every month. In this way, at the compounding rate of 8.1 percent, you will get an interest of Rs 1,785.35 per annum.
- In this way, you will have to suffer a loss of Rs 90.26 (1,875.61-1,785.35) annually.
