The Employees’ Provident Fund Organisation (EPFO) is set to offer an 8.25% interest rate on provident fund deposits for the financial year 2024-25. This news brings relief to over 27 crore EPF subscribers, as the rate remains stable from the previous year. The EPFO interest rate plays a crucial role in the financial planning of salaried employees in India, as it determines the returns on their retirement savings.
EPFO Interest Rate Know About the 8.25% Return
| Topic | Details |
|---|---|
| EPFO Interest Rate for 2024-25 | 8.25% (expected) |
| Last Year’s Interest Rate | 8.25% |
| Total EPFO Subscribers | Over 27 crore |
| Applicability | Employees with EPF accounts |
| Minimum Contribution Period for Interest | At least one financial year |
| Government Guarantee for FDs? | No confirmation yet, but DICGC insures up to ₹5 lakh |
| Official Website | EPFO Official Website |
The EPFO interest rate of 8.25% for 2024-25 offers a stable and tax-efficient way for salaried individuals to grow their retirement corpus. Compared to fixed deposits, EPF provides higher returns, better security, and tax benefits. While FD deposits come with a government guarantee of ₹5 lakh, EPFO’s track record ensures trust and stability for investors.
What is EPFO and Why is the Interest Rate Important?
The Employees’ Provident Fund Organisation (EPFO) is a statutory body under the Ministry of Labour and Employment, Government of India. It manages the Employees’ Provident Fund (EPF), which is a retirement savings scheme where both employees and employers contribute a fixed percentage of salary.
see also: SBI’s 444 and 400-Day FD Schemes
Why Does the EPFO Interest Rate Matter?
- Secures Retirement Savings: A higher interest rate means better returns on accumulated funds.
- Affects Millions of Salaried Individuals: EPF is a primary savings tool for private-sector employees.
- Influences Investment Decisions: A competitive EPF rate impacts decisions on other investments like fixed deposits (FDs), mutual funds, and Public Provident Fund (PPF).
- Encourages Long-Term Savings: Higher returns promote consistent saving habits among employees.
How is the EPFO Interest Rate Decided?
The EPFO interest rate is determined annually by the Central Board of Trustees (CBT) and is subject to approval by the Ministry of Finance. Factors influencing the rate include:
- Returns on EPFO Investments: EPFO invests in government securities, bonds, and equities, affecting the interest rate.
- Economic and Inflation Trends: Inflation impacts how much return EPFO can generate.
- Financial Market Performance: The stock market and bond yields influence EPFO’s returns.
- Liquidity Requirements: The availability of funds for withdrawals and settlements also affects the final interest rate decision.
The final decision for the 8.25% interest rate for 2024-25 will be officially confirmed after the CBT meeting on February 28, 2025.
EPFO vs. Fixed Deposits (FDs): Where Should You Invest?
With EPFO offering 8.25%, many investors are wondering how it compares with Fixed Deposits (FDs). Here’s a detailed comparison:
| Feature | EPFO | Fixed Deposit (FD) |
|---|---|---|
| Interest Rate (2024-25) | 8.25% | 6-7.5% (varies by bank) |
| Tax Benefits | Tax-free returns under 80C | Interest above ₹40,000 taxable |
| Liquidity | Withdrawable under conditions | Fixed tenure, penalty for early withdrawal |
| Government Guarantee | Indirect (managed by EPFO) | Up to ₹5 lakh insured by DICGC |
| Compounding | Annually | Quarterly or monthly (varies by bank) |
Should You Move Funds from FD to EPF?
- If you are a salaried employee, EPF is a better long-term investment due to tax benefits and higher interest.
- For short-term liquidity, FDs are preferable as they provide fixed returns and flexible tenure.
see also: know about TDS on Fixed Deposits
How to Check Your EPF Balance?
You can check your EPF balance in multiple ways:
1. Using the UMANG App
- Download the UMANG app from Google Play Store or Apple App Store.
- Login with UAN (Universal Account Number).
- Go to ‘EPFO Services’ → ‘Employee Centric Services’ → ‘View Passbook’.
2. Through SMS
Send an SMS “EPFOHO UAN ENG” to 7738299899 (replace ‘ENG’ with your preferred language code).
3. Missed Call Facility
Dial 9966044425 from your registered mobile number.
4. EPFO Portal
Visit EPFO Member Portal and login with UAN.
EPFO Interest Rate FAQs
1. Is EPF interest taxable?
If the annual EPF contribution exceeds ₹2.5 lakh, interest earned on the excess amount is taxable.
2. Can I withdraw my EPF balance anytime?
No, EPF withdrawals are subject to conditions:
- Partial withdrawals allowed for education, medical emergencies, or home purchase.
- Full withdrawal permitted after retirement (58 years) or unemployment for over 2 months.
3. What happens if I do not contribute to my EPF account for a long time?
- The EPF account remains active but earns interest only for 36 months of inactivity.
- After 7 years of inactivity, the amount is transferred to the Senior Citizens’ Welfare Fund (SCWF).
4. Will EPFO increase the interest rate in 2025?
The interest rate depends on economic conditions and returns from investments. Any hike will be decided by CBT and the Finance Ministry.
