How to calculate interest on General Provident Fund (GPF)

How to calculate interest on GPF

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 Refund 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Taken as final withdrawn Rs.1,80,000 during November, 2012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 Refund 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

Source : www.ekanews.blogspot.in
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