The EPFO Central Board of Trustees recommended an 8.25% interest rate on Employee Provident Fund balances for FY2025-26, matching last year's rate. The Ministry of Finance is yet to notify the rate officially, but the recommendation is typically accepted unchanged. For the approximately 7 crore active EPF subscribers, this translates to guaranteed, tax-free returns at a rate that beats most bank FDs.
How EPF interest is calculated
EPF interest is calculated on the monthly running balance but credited annually at the end of the financial year. This creates an important nuance: withdrawals made in the middle of the year lose interest for the remaining months.
Formula: Monthly interest = (Opening balance + contributions during month) × (8.25% ÷ 12)
Total annual interest = Sum of 12 monthly interest amounts
When is interest credited?
The interest for FY2025-26 will be credited to accounts between August and November 2026, once EPFO completes its annual reconciliation. Until then, your EPFO passbook will show contributions but not FY26 interest.
Should you do Voluntary Provident Fund (VPF) contributions?
VPF allows salaried employees to contribute more than the mandatory 12% of basic salary to EPF, up to 100% of basic salary. The entire VPF amount earns the same EPF interest rate and gets the same tax treatment.
When VPF makes sense: - You are in the 30% tax bracket — the tax-free 8.25% becomes an effective pre-tax equivalent of ~11.8% - You have a debt allocation in your portfolio and want a stable, government-backed instrument - You are within 10 years of retirement and want to build a corpus without equity risk
When VPF may not be optimal: - You are young (under 35) with a long investment horizon — equity via ELSS likely delivers better long-term returns - You need liquidity — EPF withdrawals before 5 years of continuous service are partially taxable
Checking your EPF balance
1. EPFO member portal (passbook.epfindia.gov.in) 2. UMANG app → EPFO section 3. SMS "EPFOHO UAN" to 7738299899 4. Missed call to 011-22901406 from your registered mobile