# Explained: How EPF interest is calculated?

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Every year the government fixes interest on the amount deposited in this PF account. A key question that most subscribers face is how the EPF interest is calculated?

The Employees' Provident Fund Organisation (EPFO) has started crediting 8.5 percent interest to provident fund (PF) accounts for the financial year 2020-21 as per its recent notification.
Every year the government fixes interest on the amount deposited in this PF account. A key question that most subscribers face is how the EPF interest is calculated?
Well, the EPFO calculates the month-wise closing balance and then the interest for the whole year. The interest is calculated by adding the monthly running balance and multiplying it with the interest rate/1200, Abhinav Angirish, Founder, Investonline.in told CNBC-TV18.
So, using this calculation one can figure out the interest to be credited in the beneficiary account.
But, what happens if the employee withdraws the sum from the account?
In case the employee withdraws a certain sum from the account, then interest from the beginning of the year till the last date of the month preceding the month in which withdrawal took place is taken into account, said Angirish.
"The closing balance for the year will be opening balance + contributions – withdrawal (if any) + interest. Let’s assume that the interest rate is 8.50 percent and the opening balance is Rs 1,00,000. The monthly contribution is Rs 1,000. The employee withdraws Rs 30,000 in the third month.
The interest calculated will be: the sum of monthly balance = Rs 8,87,000. Interest will be 887000 x (8.50/1200) = Rs 6,282.00.
Thus, the closing balance for the year will be opening balance + contributions - withdrawal + interest = Rs 1,00,000 + Rs. 12000 - Rs. 30000 + Rs. 6282 = Rs 88,282.00," he added.
The employers and the employees contribute 24 percent of the basic salary plus dearness allowance towards the EPFO account.
Any employee who wants to check their Provident Fund balance online can SMS, login to the official website, give a missed call or, download and make use of the UMANG App.
Before checking the balance, they need to keep the Universal Account Number (UAN) ready. The UAN links and helps a member or subscriber to view details of all Member IDs they have.
Here's a step-by-step guide on how to check EPF balance via the website: