How to Calculate Interest for General Provident Fund
[Interest = Progressive Balance x Rate of Interest Divided by 100 x Months]
General Provident Fund : Needless to say that one of the easiest and good return saving scheme for Central Government Employees who have been appointed on or before 31.12.2003.
They can save not less than 6% from the total emoluments. As per the GPF Rules, subscriptions may be increased twice and/or reduced once at any time during the year.
Interest rates are announced by the Central Government from time to time, it has now been reduced from 8.8% to 8.7% for the current year.
GPF calculation Illustration –1 :-
Monthly subscription Rs.5,000
Rate of Interest 8.8%
| Month | Subscription | Withdrawal | Progressive Balance | Interest for Year |
| Apr-12 | 5,000 | – | 5,000 | – |
| May-12 | 5,000 | – | 10,000 | – |
| Jun-12 | 5,000 | – | 15,000 | – |
| Jul-12 | 5,000 | – | 20,000 | – |
| Aug-12 | 5,000 | – | 25,000 | – |
| Sep-12 | 5,000 | – | 30,000 | – |
| Oct-12 | 5,000 | – | 35,000 | – |
| Nov-12 | 5,000 | – | 40,000 | – |
| Dec-12 | 5,000 | – | 45,000 | – |
| Jan-13 | 5,000 | – | 50,000 | – |
| Feb-13 | 5,000 | – | 55,000 | – |
| Mar-13 | 5,000 | – | 60,000 | – |
| 60,000 | – | 3,90,000 | 2860 |
Calculation of interest = 390000 / 12 x 8.8 / 100 = 2860
Closing balance as on 31.3.2013 will be = 60,000 + 2,860 = 62,860
GPF calculation Illustration –2 :- Closing balance Rs.1,80,000
Monthly subscription Rs.10,000
Rate of Interest 8.8%
Taken as final withdrawn Rs.1,80,000 during November, 2012
| Month | Subscription | Withdrawal | Progressive Balance | Interest for Year |
| Apr-12 | 10,000 | – | 1,90,000 | – |
| May-12 | 10,000 | – | 2,00,000 | – |
| Jun-12 | 10,000 | – | 2,10,000 | – |
| Jul-12 | 10,000 | – | 2,20,000 | – |
| Aug-12 | 10,000 | – | 2,30,000 | – |
| Sep-12 | 10,000 | – | 2,40,000 | – |
| Oct-12 | 10,000 | – | 2,50,000 | – |
| Nov-12 | 10,000 | 1,80,000 | 80,000 | – |
| Dec-12 | 10,000 | – | 90,000 | – |
| Jan-13 | 10,000 | – | 1,00,000 | – |
| Feb-13 | 10,000 | – | 1,10,000 | – |
| Mar-13 | 10,000 | – | 1,20,000 | – |
| 1,20,000 | 1,80,000 | 20,40,000 | 14,960 |
Calculation of interest = 2040000 / 12 x 8.8 / 100 = 14960
Closing balance as on 31.3.2013 will be = 1,20,000 + 14,960 = 1,34,960.
