+ Reply to Thread
Results 1 to 8 of 8

Thread: gpf-how interest is calculated-every month or year

  1. #1
    Junior Member stkannan is on a distinguished road
    Join Date
    Dec 2009
    Posts
    3

    Default gpf-how interest is calculated-every month or year

    i was always under the impression that interest on gpf account is calculated every month applying rate 8% divided by 12 (i.e.on monthly basis). But one of my friend told that interest rate 8% is applied once in a year only. whether it is compounded monthly or annually. whether the monthly subscription and advance repayment would earn income by way of interest that month onwards(the month when subscription or repayment is deducted)

    kannan

  2. #2
    Senior Member SASI is on a distinguished road
    Join Date
    Oct 2009
    Location
    KERALA
    Posts
    365

    Default

    GPF interest is compounded yearly. OB in a year will get interest for one year. Amount credited in April of a year will get interest for 12 months, May, 11 Months, and so on and the last credit of the year(March) will get interest for one month. Easy way of calculating is to find the sum of the progressive total of each month for a year and give it interest for one month.(sum of progressive total X 8%/12)

    SASI

  3. #3
    Senior Member RKPATHAK is an unknown quantity at this point
    Join Date
    Feb 2009
    Location
    Gurgaon
    Posts
    1,019

    Default

    You have to calculate progressive total on month to month basis and calculate accordingly

  4. #4
    Member venkatcustoms is on a distinguished road
    Join Date
    Jan 2009
    Posts
    87

    Default

    If you know tamil, this page will help you.

    http://kanakkupaadam.blogspot.com/20...g-post_26.html

  5. #5
    Junior Member gconnectsna is on a distinguished road
    Join Date
    Sep 2008
    Location
    Mumbai
    Posts
    28

    Default

    The GPF interest allowed at the end of financial year is actually SIMPLE INTEREST (not compound interest as stated earlier by SASI). The interest is the sum of simple interest on the Opening Balance and monthly contributions minus the simple interest on any debits during the year.
    For eg if your opening balance was 100000 with monthly contribution of 1000 each with no advance/withdrawal during the year you interest will be 8520 which is the sum of simple interest on opening balance (100000*8/100 = 8000) plus simple interest on each subscription (1000*8/100*12/12+1000*8/12*11/12+....1000*8/12*1/12 = 520). total = 8520.
    If however in the above example there was a withdrawal in say April of say 50000 then you have to deduct simple interest on 50000 for 12 months (50000*8/100*12/12 = 4000) total = 8520 - 4000 = 4520.
    "Life is like a box of chocolates. You never know what you're gonna get."
    - Forest Gump's Momma

  6. #6
    Senior Member SASI is on a distinguished road
    Join Date
    Oct 2009
    Location
    KERALA
    Posts
    365

    Default

    I said the interest compounds yearly.

    sasi

  7. #7
    Member krishnan09 is on a distinguished road
    Join Date
    Jan 2010
    Posts
    86

    Default PF interest compounds yearly

    Mr.Sasi is correct in this regard and GpF interest compounds yearly. Interest which is calculated not only on the principal but also the accumulated interest of prior periods. Compound interest differs from simple interest in that simple interest is calculated solely as a percentage of the principal sum.

  8. #8
    Junior Member mahesh.teacher is on a distinguished road
    Join Date
    May 2011
    Posts
    29

    Default

    the interest is charged annually on our GFP contribution like someone contributing Rs 2000 for each month in April to May so interest will be

    Ist way 2000X78X8/12X100=1040 mean the The interest for the year will be Rs 1,040
    2nd way is 2000X12X8/12X100=160
    2000X11X8/12X100=147 and so on we will calculate for each month and at the end of the year we will add that amount which is the interest for whole year

+ Reply to Thread

Similar Threads

  1. Calender year or what?
    By REX88 in forum Income Tax
    Replies: 6
    Last Post: 20-08-2016, 02:54 PM
  2. Medical Advance when Hospital estimate is Rs.6 Lakh (for one month treatment)
    By Ramnath in forum CGHS and Medical Attendance Rules
    Replies: 2
    Last Post: 05-06-2011, 01:57 PM
  3. PF interest
    By prasannakumar in forum GPF
    Replies: 14
    Last Post: 19-03-2011, 07:27 AM
  4. Replies: 2
    Last Post: 20-07-2010, 03:46 PM
  5. one month salary against ltc
    By devsingla123 in forum LTC
    Replies: 1
    Last Post: 10-02-2010, 04:35 PM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts