Why should you check if your EPF interest is credited on a regular basis

In a country where retirement savings form the backbone of financial security for millions of workers, the Employee Provident Fund (EPF) stands as a crucial pillar of social security. However, recent developments have highlighted the critical importance of regularly monitoring your EPF interest credits – a practice that many subscribers often overlook.

  “The essential regular checks for interest being credited will help one understand whether the EPF is being credited and whether transparency is being maintained by the government or not. If it is not being received, one can take appropriate steps to claim the same. it will impact the long term financial planning. EPF interest rates are subject to periodic revision and keeping a check on it will also keep one updated and plan accordingly,” said Alay Razvi, managing partner, Accord Juris.

 

Importance of monitoring EPF Interest

 

Awareness of Earnings: Regularly checking your EPF balance allows you to stay informed about how much interest has been credited to your account. The EPF interest is calculated on a monthly basis, but credited at the end of the financial year. This means that if you are not vigilant, you might miss out on understanding how your savings are growing over time.

 

Financial planning: Knowing your EPF balance and interest earned helps in better financial planning for retirement. It allows you to estimate how much you will have when you retire, aiding in setting realistic financial goals and ensuring that you are on track to meet them.

 

Error detection: By checking your EPF account regularly, you can quickly identify any discrepancies or errors in the credited interest or contributions. If there are issues, such as incorrect calculations or missing credits, addressing them promptly can prevent long-term financial implications.

 

Key points to keep in mind:

 

- Ensure accuracy in credited interest and spot discrepancies.

 

- Verify timely employer contributions to avoid potential delays.

 

- Track the growth of your retirement corpus and monitor compounded interest.

 

- Identify employer defaults or administrative errors early.

 

- Plan tax liabilities based on the new tax rule for contributions exceeding Rs 2.5 lakh.

 

- Stay updated on EPFO interest rate changes and their application.

 

“Recent tax rules state that interest on contributions exceeding Rs 2.5 lakh per year is taxable, so keeping an eye on credited interest helps you plan your tax liabilities and ensure accurate filings. Lastly, checking your balance keeps you updated on the interest rates announced by EPFO, allowing you to verify if the new rate has been applied correctly. You can easily check your EPF balance through the UMANG app, EPFO portal, or SMS/missed call services,” said Amit Bansal, partner, Singhania & Co.