Key idea
EPF earns a fixed rate set each year, compounded over decades. The magic is not the rate. It is the runway.
EPF pays interest at a rate the government declares annually. For FY 2025-26 it is 8.25% per year, a rate that has held steady for several years. Interest is calculated monthly on your balance and credited once a year, and for most employees it is entirely tax-free.
A steady contribution, left to compound
- Yr3
- Yr8
- Yr13
- Yr18
- Yr24
- Yr30
25%, over a career The curve should look familiar from compounding: slow at first, then steep. Because EPF runs for your entire working life and is rarely touched, it reaches the steep part that most voluntary saving never does.
One tax nuance
Interest on your own contributions above ₹2.5 lakh in a year is taxable (a limit that affects only high earners or heavy voluntary savers). Below that, the interest stays tax-free. Figures for FY 2026-27. The Budget can change them each year, so confirm the current year.
Finished reading?
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