EPF Interest Calculations: Age 25, monthly basic salary Rs 20,000; know how much fund can you generate in 25, 30, and 35 years
EPF Interest Calculations: Private sector employees can generate a sizeable tax-free corpus by investing in Employees' Provident Fund (EPF). Contributions of up to Rs 1.50 lakh in a financial year also provide them tax benefits under Section 80C of the Income Tax Act, 1961.
EPF Corpus Calculations: Retirement planning is an important aspect for everyone seeking financial freedom in post-retirement life. They can invest in market-linked and non-market-linked retirement schemes to generate a retirement corpus that can help them meet expenses in their retirement life. Employees' Provident Fund (EPF) is one such scheme, where a fixed amount is deducted from a private sector employee's basic monthly salary and is contributed to their EPF account. The employer also contributes to the employee's EPF and Employees' Pension Scheme (EPS) account. Know more details about the scheme and what is the corpus a 25-year-old with a starting monthly basic salary of Rs 20,000 can generate if they invest till 60 years of age.
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(Disclaimer: These are projections. Actual calculations may vary.)
What are minimum and maximum EPF contributions?
The minimum monthly EPF contribution an employee can make to their EPF account is Rs 1,800. The maximum is a 12 per cent of their basic salary and dearness allowance. So, it can vary from person to person.
What is EPF interest rate?
The current EPF interest rate is 8.25 per cent, which is calculated monthly and compounded yearly. The interest amount is deposited on March 31 of the applicable financial year.
What is employer's EPF contribution?
The employer also contributes up to 12 per cent of the employee's basic salary and dearness allowance. Its 3.67 per cent contribution goes to the employee's EPF account and 8.33 per cent goes to their EPS account.
What are EPF tax benefits?
On EPF deposits, the EPF account holder gets tax benefits of up to Rs 1.50 lakh a financial year under Section 80C of the Income Tax Act, 1961. The interest earned and the maturity amount are also tax free.
When can one withdraw EPF amount?
They can withdraw their EPF at the retirement age of 58 years, but they can also do so on completion of 10 years of service, or remaining unemployed for at least 2 months, or for purposes such as marriage, buying, or renovating a home.
Till what age can one contribute to EPF?
An employee can contribute up to the age of 60 years to their EPF account.
EPF corpus calculation
We will take the example of a 25-year employee with a basic salary of Rs 20,000. We will assume a 5 per cent raise in their annual income. We will calculate the corpus they can create in 25, 30, and 35 years by contributing 12 per cent of their basic salary.
EPF corpus in 25 years
The invested amount in 25 years will be Rs 19,22,335, the estimated interest earned will be Rs 34,62,844, and the estimated corpus will be Rs 53,85,179.
EPF corpus in 30 years
The invested amount in 30 years will be Rs 26,61,252, the estimated interest earned will be Rs 62,79,292, and the estimated corpus created will be Rs 89,40,544.
EPF corpus in 35 years
The total EPF contribution in 35 years will be Rs 36,04,312, estimated interest will be Rs 1,08,79,549, and the estimated corpus will be Rs 1,44,83,861.