EPF interest not credited? When to expect it for FY25, and will the delay impact your earnings?

Under Employees' Provident Fund (EPF), members enjoy tax-free (in most conditions) interest on their and their employer’s contributions. Sometimes, interest credit gets delayed, but does that mean you will lose out on money? Let’s find out.

EPF interest credit timeline

Every year, the Central Board of Trustees of the Employees Provident Fund Body (EPFO) announces the EPF interest rate, usually between February and May. This interest is applicable to the financial year that started a year before the announcement.

For instance, if the EPFO announces an interest rate in February 2024, the interest rate would be applicable on the contributions made during 2023-2024.

Once the EPFO announces the rate, it takes a while for the interest money to be credited into the subscribers’ accounts, as many calculations go into the process. The processing at the backend takes time, along with coordination with the financial institutions. The actual credit ends up taking place after weeks and sometimes even after months. Like in FY23, the interest was credited by August or September, months after the rate was declared in March.

Many question these delays, asking EPFO why the process takes so much time. A user on the social media platform X recently wrote, "In this age of AI & digitization, what complex calculations is the EPFO supposed to do that it takes more than 14 months to calculate interest?"

For the year 2024-25, the EPFO declared an interest rate of 8.25%, keeping it the same as the previous financial year. The interest money will be credited into your accounts this year after the processing by the EPFO is completed.

Do you suffer a loss because of delays?

The EPFO calculates interest based on the monthly running balance, even if the total interest amount is credited into accounts at the end of the financial year, following Para 60 of the EPF Scheme, 1952. This ensures that the subscribers earn the full interest rate declared by the EPFO.

If this were like any other deposit, members would have suffered a loss. For example, if you deposit ₹20,000 (principal amount) in a fixed deposit that offers you an interest rate of 10%, when it is credited, it will become ₹22,000 after a year. The new principal amount then becomes ₹22,000, and 10% interest on it is ₹2,200, ₹200 more than the interest you would have received on the original deposit.

However, as the EPFO calculates interest on monthly running balances and credits the money at the end of the financial year, even if the interest gets credited late, it will not impact the amount you receive at the end. This means that the interest is calculated for each month of the financial year accordingly, and you receive the interest rate announced, which is 8.25% for this year, even if there is a delay.

Interest shall be credited to the member's account on a monthly running balance basis with effect from the last day of each year in the following manner:

• on the amount at the credit of a member on the last day of the preceding year, less any sums withdrawn during the current year, interest for twelve months;

• on sums withdrawn during the current year— interest from the beginning of the current year up to the last day of the month preceding the month of withdrawal;

• on all the sums credited to the member's account after the last day of the preceding year—interest from the 1st day of the month succeeding the month of credit to the end of the current year;

• the total amount of interest shall be rounded to the nearest whole rupee (fifty paise counting as the next higher rupee).

Further, the EPFO does not offer interest on inoperative accounts. This means that from the date when your account becomes inactive, you will not receive any interest on the amount.

"Interest shall not be credited to the account of a member from the date on which it has become an Inoperative Account, under the provisions of sub-paragraph (6) of Paragraph 72," according to the EPF Scheme, 1952.

So if you plan to withdraw your EPF funds and close your account, you must do it after the interest is credited to your account. This will ensure that you receive interest until you contribute to the EPF.

What should you do if you did not receive EPF interest?

If you haven’t received your EPF interest yet, and the financial year has just ended, sit tight, as you will receive it soon. Even with the delays, the EPFO ensures crediting of interest money into its subscribers' accounts.

If it has been a few months since the financial year ended and you still haven’t received interest, you can write to the EPFO and submit a grievance using the EPFiGMS (EPF i-Grievance Management System) portal.

Even with delays, individuals do not suffer monetary loss in most cases. Keep an eye on your EPFO passbook to see if you have received the interest. In case the interest has been credited, your passbook will reflect it under a unique entry.