How to calculate interest on 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Taken as final withdrawn Rs.1,80,000 during November, 2012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