Employee Provident Fund Calculator

EPF Calculator

What is a EPF calculator?

The Employee Provident Fund or the EPF is a retirement benefits scheme for salaried employees in the private sector. The Employees Provident Fund Organisation (EPFO) manages the EPF. Any organisation or firm with 20 or more employees gets covered under the EPFO. The Employees Provident Fund Organisation operates three schemes.

What is Employee Pension Scheme (EPS)?

In this fund the employer and the Central Government contribute a defined amount every month with the sole objective of providing regular pension to the employee post retirement.

You as an employee do not contribute to your own Pension Scheme, this is contributed by your employer and by the Central Government.

Your employer contributes 8.33% of Rs. 6,500 Basic salary to the Employee Pension Scheme, and the Central Government contributes 1.16% of the same. The EPS provides you with regular annuity after your retirement.

How does an EPF calculator work?

To understand how the EPF calculator works, let us have an example.

Employees basic salary + dearness allowance = Rs 14,000 Employees contribution towards the EPF = 12% * 14,000 = Rs 1,680 Employers contribution towards the EPF = 3.67% * 14,000 = Rs 514 Employers contribution towards EPS = 8.33% * 14,000 = Rs 1,166.

The total contribution that is made by the employer and employee towards the EPF account of the employee = Rs 1,680 + Rs 514 = Rs 2,194.

You have the interest rate at 8.5% for FY 2020-21.

You can calculate the interest rate which is applicable for each month as:

8.5%/12 = 0.70833%

Assume the employee joined the Firm XYZ in April 2019. The total EPF contribution for April will be Rs 2,194. The EPF scheme will not pay any interest for April.

The total EPF contribution for the month of May = Rs 4,388. (Rs 2,194+ Rs 2,194). He gets an interest of Rs 4,388 * 0.70833% = 31.08.

The calculation is done similarly for the subsequent months.

How to use the ClearTax EPF Calculator?

  • You must enter your current age by using the slider.
  • You then fill the basic monthly salary and the dearness allowance up to a maximum limit of Rs 15,000.
  • The minimum percentage of contribution to your EPF is 12%. You can increase the percentage if you are making any contribution to the Voluntary Provident Fund.
  • You fill in the retirement age up to a maximum of 58 years.
  • You can add the current EPF balance if you know the amount.
  • The ClearTax EPF Calculator will show you the EPF funds available at retirement.

Benefits of EPF

For a salaried person, contributions to the EPF offer a lot of benefits:

  • Safe returns This is one of the safest debt instruments available in the country. It is government backed and guarantees safety of principal and interest earned. It can help you accumulate a significant corpus for your retirement, as the contributions happen month on month for your entire working life. This makes it suitable for very long term financial goals.

  • Friendly tax treatment This is an E-E-E instrument – meaning your contributions are deductible under Section 80C, interest earned is tax free and maturity proceeds are also tax free, provided contributions to the fund have been for more than 5 years of service.

  • Interest earned on EPF is the equivalent of a high pre-tax rate Considering that the EPF is paying 8.75% this year, this is the equivalent of a 12.50% rate of interest (for somebody in the 30% tax bracket). This interest rate is guaranteed and risk-free.

EPF Interest Rate Calculation

The Employees’ Provident Fund (EPF) is a savings scheme for employees who are working for organisations that come under the Employees’ Provident Fund Organisation (EPFO).

  • Employer and employee make contributions
  • Interest rate is 8.5% p.a.
  • Wage ceiling is Rs.15,000
  • Mandatory for organisations with over 20 employees

How to transfer EPF money online?

Step 1. In the event of a job change, EPF can be transferred using the Universal Account Number (UAN) which will remain the same

Step 2. Go to the official EPF member portal and complete the registration

Step 3. Log in once you get the login credentials

Step 4. Visit the Online Transfer Claim Portal and request for EPF transfer using the same login details as above

Step 5. If you are eligible to make the transfer claim online, you can do it without having to submit the Form 13

Step 6. Click ‘Request for Transfer of Funds’ and enter your old employment details as directed

Step 7. Get it authenticated by your previous or new employer

Step 8. After entering the details, you will receive a PIN on your mobile

Step 9. Use the tracking ID generated for you to track your application.