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EPF Calculator: Calculate EPF Returns Online
Use the EPF calculator and get an idea about the EPF amount you are liable to get beforehand. An EPF calculator helps calculate an approximate amount an individual will acquire at the end of his/her service life. Also, using an EPF calculator can ensure other benefits, some of which have been covered in this piece.
Read on to know what an EPF calculator is and how it works.
How Does an EPF Calculator Work?
EPF calculator uses proprietary technology to compute the correct sum every time an individual enters valid data regarding his/her monthly EPF deposits. Through this calculator, individuals can easily calculate a lump-sum amount (including employee's contribution, employer’s contribution and interest payment) they will accumulate in their EPF account after retirement.
The EPF calculator features a formula box where individuals must enter certain information such as their age, monthly salary, and individual contribution to the EPF and dearness allowance.
They can also put their current balance (in case they know the figures). Once all such valid information is put in the relevant box, this calculator shows approximate EPF funds available after retirement.
Currently, the availability of EPF calculators online has made the process even easier. Now let’s understand the calculation process in detail.
What Is the Formula for EPF Calculation?
To understand the basics of EPF calculation and the contributions made by the employee and the employer, one must refer to the following section.
Employee’s contribution towards EPF = 12% of (Basic pay + DA)
Employer’s contribution towards EPF = 12% of (Basic pay + DA)
Please note that the 12% of employer’s contribution is divided into two parts, 8.33% towards employee’s pension scheme (EPS) and 3.67% towards Provident fund.
To simplify the above formula, let’s understand the meaning of each term from the given table:
Terms | Meaning |
Basic Pay | The standard rate of pay before additional payments |
DA | Dearness Allowance is an amount added to the basic salary to calculate the take-home amount. |
Next, we focus on how interest is calculated on both the employee and employers’ contributions at the end of a year.
The interest rate for FY 2020-2021 is 8.5% p.a.
Therefore, the applicable interest rate per month is 8.5%/12= 0.7083%.
This calculation is performed on the opening balance of each month. As the first month's opening balance is zero, interest earned amounts to zero as well. Interest for the second month is computed on the closing balance of the first month, which is also the opening balance of the first month. This calculation is done similarly for later months.
Individuals can use an EPF interest calculator to know the interest amount earned every month and year.
However, the total interest of the first year is added to the sum of both employers’ and employees’ contributions, which is the opening balance for the second year.
Similar to the EPF calculator, individuals can calculate the accumulated amount using an EPF calculator Excel sheet. In addition, this Excel-based EPF calculator helps individuals understand the EPF corpus better and enhance investment decisions.
Those willing to know how EPF calculator works, must understand the example and calculation process mentioned below.
Different Scenarios of EPF Calculation
Scenario 1: In case the employee’s salary is less than or equal to ₹15000-
Inputs for calculation of EPF
Inputs | Values (May be Subjected to Change) |
Basic salary + DA | ₹12,000 |
Employee’s contribution towards EPF | 12% of ₹12,000 |
Employer’s contribution towards Employee Pension Scheme | 33% of ₹12,000 |
Employer’s contribution towards EPF | 3.67% of ₹12,000 |
Outputs generated from the above values are mentioned below.
Outputs | Values for the Above Inputs |
Employee’s contribution towards EPF | ₹1440/month |
Employer’s contribution towards EPS account | ₹1000/month rounded off |
Employer’s contribution towards EPF account | ₹440/month rounded off |
Scenario 2: In case an employee’s salary (Basic pay + DA) exceeds ₹15000, the calculation changes in the following way-
Inputs for calculation of EPF
Inputs | Values (May be Subjected to Change) |
Basic salary + DA | ₹20,000 |
Employee’s contribution towards EPF | 12% of ₹20,000 |
Employer’s contribution towards Employee Pension Scheme | 8.33% of ₹15,000 |
Employer’s contribution towards EPF | B - C |
Outputs generated from the above values are mentioned below.
Outputs | Values for the Above Inputs |
Employee’s contribution towards EPF | ₹2400/month |
Employer’s contribution towards EPS account | ₹1250/month rounded off |
Employer’s contribution towards EPF account | ₹ (2400-1250) = ₹1150/month rounded off |
Steps to Calculate the EPF Amount at Retirement
To know the accumulated amount one will get at retirement, individuals have to follow the process mentioned below -
- Step 1: Put your current age and retirement age up to a maximum of 58 years at the relevant box.
- Step 2: Enter your basic monthly salary and expected annual average increment in basic salary.
- Step 3: Provide both the figure of employer’s contribution and employee’s contribution.
- Step 4: Lastly, provide interest rate (decided by the government) accrued on EPF balance.
By using the provided data, the EPF calculation formula completes the computing process and shows the result.
Uses of EPF Calculator
By using the EPF calculator, individuals can easily find out and understand the following facts-
- Individuals can compute EPF corpus at retirement.
- They can determine the EPF corpus.
- Individuals can use this calculator to get an idea about how much they should contribute to earning a specific return after retirement.
- Individuals can set a financial goal by using this calculator.
- Similarly, they can make financial planning by adjusting the factors in the calculator.
- Individuals can use this calculator to increase their contribution towards retirement.
Advantages of EPF Calculator
The benefits of the EPF calculator are numerous. These are discussed below-
- EPF calculator helps individuals to know quickly about an accumulated fund at the end of their service life.
- As individuals get an idea about the EPF corpus, they can increase the percentage to earn the desired amount at retirement.
- With awareness of the EPF corpus, subscribers can efficiently plan other investments.
- By using this calculator, individuals can plan their retirement judicially. They can increase their contribution if they wish to retire early.
Equipped with the knowledge of the multifaceted advantage of the PF calculator, its uses and the calculation process, individuals can efficiently plan their retirement and ensure a financially secure life.
