Discover the potential of financial security with EPFO’s latest announcement of an attractive 8.15% interest rate for the financial year 2022-23. In this article, explore how EPF contributions work, learn about the historical interest rates, understand deductions and TDS on EPF interest, and easily check your EPF account balance. Unleash the power of your EPF contributions and secure a prosperous future.
Introduction
Great news has arrived for employees who have been eagerly awaiting updates on their Employees’ Provident Fund (EPF) accounts. The Employee Provident Fund Organization (EPFO) has recently declared an interest rate of 8.15% for the financial year 2022-23. This development holds immense significance for the financial well-being of millions of EPF members across India. In this article, we will delve into the details of EPF contributions, explore the historical context of EPF interest rates, understand deductions and TDS on EPF interest, and learn about easy methods to check EPF account balances.
EPFO: Safeguarding Employees’ Future
As one of the world’s largest social security organizations, the EPFO ensures a safety net for employed individuals in India. With an impressive 27.74 crore accounts under its administration, EPFO provides financial security for its vast clientele. As an autonomous body under the Ministry of Labour and Employment, Government of India, EPFO operates several schemes, including the Employees’ Provident Fund Scheme 1952 (EPF), the Employees’ Pension Scheme 1995 (EPS), and the Employees’ Deposit Linked Insurance Scheme 1976 (EDLI).
EPF: Contribution by Employer and Employees
For EPF contributions, the employee is required to contribute Rs. 1800/- or 12% of the basic salary + dearness allowance, whichever is lower. However, employees can contribute at a higher rate above 12% with the consent of the employer. In cases where an organization has fewer than 20 employees, employees are mandated to make an EPF contribution of 10% instead of 12%.
The employer is equally responsible for making contributions to the EPF account, but the liability of the employer’s contribution is limited to 12%, even if the employee contributes more than 12%.
EPF: Interest Rate from formation to present
EPFO’s interest rates have witnessed fluctuations over the years, responding to economic conditions and government policies. The interest rate journey began with a modest 3% in the early 1950s and reached its peak of 12% during the years 1989-2000 with the lowest recorded rate of 8.10% in the year 2021-22. Let’s explore the interest rate history through a table:
| Year | Interest Rate Declared |
| 1952-55 | 3.00% |
| 1955-57 | 3.50% |
| 1957-63 | 3.75% |
| 1963-64 | 4.00% |
| 1964-65 | 4.25% |
| 1965-66 | 4.50% |
| 1966-67 | 4.75% |
| 1967-68 | 5.00% |
| 1968-69 | 5.25% |
| 1969-70 | 5.50% |
| 1970-71 | 5.70% |
| 1971-72 | 5.80% |
| 1972-74 | 6.00% |
| 1974-75 | 6.50% |
| 1975-76 | 7.00% |
| 1976-77 | 7.50% |
| 1977-78 | 8.00% |
| 1978-79 | 8.25% + 0.5% Bonus (For members who did not withdraw any amount from PF during 1976-78) |
| 1979-81 | 8.25% |
| 1981-82 | 8.50% |
| 1982-83 | 8.75% |
| 1983-84 | 9.15% |
| 1984-85 | 9.90% |
| 1985-86 | 10.15% |
| 1986-87 | 11.00% |
| 1987-88 | 11.50% |
| 1988-89 | 11.80% |
| 1989-00 | 12.00% |
| 2000-01 | 12% (Apr-Jun-2001), 11% (Jul-2001 onwards) |
| 2001-05 | 9.50% |
| 2005-10 | 8.50% |
| 2010-11 | 9.50% |
| 2011-12 | 8.25% |
| 2012-13 | 8.50% |
| 2013-15 | 8.75% |
| 2015-16 | 8.80% |
| 2016-17 | 8.65% |
| 2017-18 | 8.55% |
| 2018-19 | 8.65% |
| 2019-21 | 8.50% |
| 2021-22 | 8.10% |
| 2022-23 | 8.15% |
Deduction on Interest of EPF
Following budget 2021, interest income on an employee’s contributions to an EPF account above ₹2.5 lakh during the financial year is taxable in the hands of the employee and is subject to TDS. For government employees, the threshold limit is ₹5 lakh instead of ₹2.5 lakh.
TDS on Interest from EPF
For resident Indians, if the interest income exceeds ₹5000 for the financial year, TDS is applicable at a rate of 10% under section 194A of the Income Tax Act. However, if the PF account is not linked with a valid PAN, TDS will be deducted at a rate of 20%.
For Non-Resident Indians, tax is deductible even if the interest is less than ₹5000 under section 195 of the Income Tax Act. The rate of TDS is 30% or the rate specified under the Double Taxation Avoidance Agreement (DTAA), whichever is beneficial to PF members. If the PF account is not linked with a valid PAN, TDS will be deducted at a rate of 30%, and TDS will also increase by 4% cess.
How to Check Balance of EPF?
To keep track of their EPF balance, members have multiple options to check their account balance conveniently:
1. Visit the EPFO’s official website (www.epfindia.gov.in), access the E-Passbook section, log in using Universal Account Number (UAN), password, and Captcha, and download the PDF format.
2. Utilize the UMANG application to access EPF balance.
3. Avail SMS facilities by sending SMS EPFOHO <UAN> to 7738299899 from the registered mobile number.
4. Give a missed call from the registered mobile number to 9966044425.
Conclusion
The EPFO’s announcement of an 8.15% interest rate for 2022-23 marks a significant milestone in the journey of social security for EPF members. With attractive returns, EPF empowers its members in securing their future. By leveraging the benefits of their EPF contributions, employees can look forward to a prosperous and financially secure life ahead. Understanding the nuances of EPF contributions, interest rates, deductions, and TDS ensures that employees can make informed financial decisions and unlock the true potential of their EPF accounts.
Frequently Asked Questions (FAQ)
What is the process to increase EPF contribution?
The process to increase PF contribution is decided by the employer and the employee. An employee can choose to contribute more than 12% of their basic salary towards EPF with the consent of the employer.
What is the increase in EPF rate?
The increase in EPF rate for 2022-23 is 0.05%. New rate is 8.15% now.
Who decides EPF rates?
EPF rates are decided by the Central Board of Trustees (CBT) and are approved and notified by the government each year.
What is the interest rate for EPF 2023?
The interest rate for EPF in 2023 is 8.15%.
Can employee contribute more than 12% of basic salary towards EPF?
Yes, an employee can contribute more than 12% of their basic salary towards EPF with the consent of the employer.
Who controls EPF?
EPF is controlled by the Central Board of Trustees (CBT) which is formed by representatives of employers, employees, and the government.
What was the highest EPF interest rate?
The highest EPF interest rate was 12% in the years from 1989-2000.
What is the PF Salary limit?
The PF salary limit is ₹15,000. Employees whose salary is up to ₹15,000 must be enrolled with EPF.
Can an employee have 2 EPF accounts?
No, an employee cannot have two EPF accounts. Each employee is allowed to have only one EPF account.
Which is better EPS or EPF?
Both EPS (Employees’ Pension Scheme) and EPF (Employees’ Provident Fund) are important for securing the financial future of employees. EPS provides a pension to employees after retirement, while EPF builds a corpus for their retirement.
What is the TDS rules for EPF?
The TDS rules for EPF are as follows:
For resident Indians, if the interest income is more than ₹5,000 for the financial year, TDS is applicable at 10% under section 194A of the Income Tax Act. If the PF account is not linked with a valid PAN, TDS will be deducted at 20%.
For Non-Resident Indians (NRIs), tax is deductible even if interest is less than ₹5,000 under section 195 of the Income Tax Act, and the rate of TDS is 30% or the rate specified under Double Taxation Avoidance Agreement (DTAA), whichever is beneficial to the PF members. If the PF account is not linked with a valid PAN, TDS will be deducted at 30% and will also increase by 4% cess.
Is EPF Interest credited for 2022-23?
EPF interest will be credited now for the financial year 2022-23, as the rate is 8.15% declared.
Image Source:
1. FinMin Image By Ministry of Finance (GODL-India), GODL-India, https://commons.wikimedia.org/w/index.php?curid=134279420
2. EPFO logo sourced from official website of EPFI (https://www.epfindia.gov.in/site_en/index.php)
Reference:
- EPFO circular dated 24th July, 2023: https://www.epfindia.gov.in/site_docs/PDFs/Circulars/Y2023-2024/Declaration_Rateofinterest_INV_24072023.pdf
- For more details on Employees’ Provident Fund visit the official website: https://www.epfindia.gov.in/
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