GPF: Government Announces New Interest Rate, Check Details
Eligible government employees covered under the General Provident Fund (GPF) scheme will continue to earn an annual interest rate of 7.1% during the July-September 2026 quarter after the government decided to retain the existing rate. The decision means there will be no change in GPF deductions from July salaries, allowing subscribers to continue their savings plans without any revision in contributions linked to the notified interest rate.
The announcement also keeps the Public Provident Fund (PPF) interest rate unchanged at 7.1%. In comparison, the Employees' Provident Fund (EPF) continues to carry a notified interest rate of 8.25% for the financial year 2025-26, highlighting how different provident fund schemes currently offer different returns.
It is worth noting that the General Provident Fund is available only to eligible government employees covered under the scheme. Employees governed by other retirement savings arrangements, such as the National Pension System, are not GPF subscribers.
For many subscribers, stability is just as valuable as a rate revision. It allows better financial planning without the need to recalculate expected returns every quarter.
Interest under the GPF is calculated every month based on the monthly closing balance in the account. However, the accumulated interest is credited only at the end of the financial year.
For example, if the closing balance in a GPF account on July 31 is Rs 10 lakh, the interest earned for July at an annual rate of 7.1% works out to approximately Rs 5,917. Although calculated monthly, this amount is credited to the account only at the year-end.
Any fresh contribution starts earning interest from the month it is deposited. Employees planning additional voluntary contributions may therefore benefit from making them earlier rather than later in the financial year.
The General Provident Fund is meant for eligible government employees covered under the scheme and does not involve any employer contribution. The Employees' Provident Fund is primarily meant for eligible salaried employees in the organised sector and includes contributions from both employees and employers.
The Public Provident Fund is a government-backed small savings scheme that can be opened by eligible individuals. It continues to enjoy Exempt-Exempt-Exempt (EEE) status under the prevailing tax provisions, meaning qualifying investments, interest earned and maturity proceeds remain tax-free.
The notified interest rates also vary. GPF and PPF currently offer 7.1%, while EPF carries a notified interest rate of 8.25% for the financial year 2025-26. These differences can influence the growth of long-term retirement savings, although the overall benefit of each scheme also depends on eligibility, contribution limits, tax treatment and withdrawal rules.
Liquidity is another area where the schemes differ. GPF subscribers may avail themselves of advances and withdrawals subject to the applicable rules. EPF permits withdrawals under specified conditions, while PPF allows partial withdrawals and loans only after prescribed lock-in periods and in accordance with the scheme's rules.
Under the old tax regime, eligible investments in GPF, EPF and PPF qualified for deduction under Section 80C of the Income-tax Act. Taxpayers opting for the new tax regime under Section 115BAC generally do not receive this deduction.
The taxation of interest also differs. In EPF accounts, interest earned on an employee's contribution exceeding Rs 2.5 lakh in a financial year is taxable under the applicable rules. In GPF, where there is no employer contribution, this threshold is Rs 5 lakh.
These differences may affect the post-tax return, particularly for employees making higher voluntary contributions.
Employees with outstanding GPF advances should also verify repayment entries to ensure their account records remain accurate. Keeping track of contributions throughout the year can help avoid discrepancies later.
Drawing and Disbursing Officers (DDOs) should ensure the correct GPF schedule accompanies salary bills and that interest calculations continue at the notified rate of 7.1%. Completing or updating the e-nomination is equally important, as an accurate nomination can help minimise delays in the settlement of claims.
EPF subscribers should periodically review their EPF passbooks to ensure interest is credited correctly. GPF subscribers can use the Accountant General portal or the official GPF services provided by their respective state or department to access account information and complete eligible service-related requests.
Another point worth remembering is that, under the applicable GPF rules, interest on final withdrawals continues to accrue until the date of payment. With the interest rate unchanged for the July-September quarter, eligible GPF subscribers can continue planning their retirement savings with greater certainty while ensuring their contributions, nominations and account records remain up to date.
Image Courtesy: Meta AI
The announcement also keeps the Public Provident Fund (PPF) interest rate unchanged at 7.1%. In comparison, the Employees' Provident Fund (EPF) continues to carry a notified interest rate of 8.25% for the financial year 2025-26, highlighting how different provident fund schemes currently offer different returns.
It is worth noting that the General Provident Fund is available only to eligible government employees covered under the scheme. Employees governed by other retirement savings arrangements, such as the National Pension System, are not GPF subscribers.
A Stable Quarter For Long-Term Savings
An unchanged interest rate offers predictability for GPF subscribers. Since the notified rate has not been revised, employees can estimate their savings growth more confidently and decide whether they wish to continue with their existing contribution pattern or increase voluntary contributions.For many subscribers, stability is just as valuable as a rate revision. It allows better financial planning without the need to recalculate expected returns every quarter.
Interest under the GPF is calculated every month based on the monthly closing balance in the account. However, the accumulated interest is credited only at the end of the financial year.
For example, if the closing balance in a GPF account on July 31 is Rs 10 lakh, the interest earned for July at an annual rate of 7.1% works out to approximately Rs 5,917. Although calculated monthly, this amount is credited to the account only at the year-end.
Any fresh contribution starts earning interest from the month it is deposited. Employees planning additional voluntary contributions may therefore benefit from making them earlier rather than later in the financial year.
GPF, EPF And PPF: Understanding The Differences
While all three schemes encourage long-term savings, they differ in eligibility, returns, taxation and withdrawal rules.The General Provident Fund is meant for eligible government employees covered under the scheme and does not involve any employer contribution. The Employees' Provident Fund is primarily meant for eligible salaried employees in the organised sector and includes contributions from both employees and employers.
The Public Provident Fund is a government-backed small savings scheme that can be opened by eligible individuals. It continues to enjoy Exempt-Exempt-Exempt (EEE) status under the prevailing tax provisions, meaning qualifying investments, interest earned and maturity proceeds remain tax-free.
The notified interest rates also vary. GPF and PPF currently offer 7.1%, while EPF carries a notified interest rate of 8.25% for the financial year 2025-26. These differences can influence the growth of long-term retirement savings, although the overall benefit of each scheme also depends on eligibility, contribution limits, tax treatment and withdrawal rules.
Liquidity is another area where the schemes differ. GPF subscribers may avail themselves of advances and withdrawals subject to the applicable rules. EPF permits withdrawals under specified conditions, while PPF allows partial withdrawals and loans only after prescribed lock-in periods and in accordance with the scheme's rules.
Tax Treatment Is Not The Same Across Schemes
Tax rules continue to be an important consideration while choosing a long-term savings option.You may also like
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Under the old tax regime, eligible investments in GPF, EPF and PPF qualified for deduction under Section 80C of the Income-tax Act. Taxpayers opting for the new tax regime under Section 115BAC generally do not receive this deduction.
The taxation of interest also differs. In EPF accounts, interest earned on an employee's contribution exceeding Rs 2.5 lakh in a financial year is taxable under the applicable rules. In GPF, where there is no employer contribution, this threshold is Rs 5 lakh.
These differences may affect the post-tax return, particularly for employees making higher voluntary contributions.
July Checklist For GPF Subscribers
With the new quarter underway, subscribers should review their July salary slip to ensure the GPF deduction has been recorded correctly. Anyone planning to increase voluntary contributions should complete the required formalities before salary processing is finalised, subject to departmental procedures.Employees with outstanding GPF advances should also verify repayment entries to ensure their account records remain accurate. Keeping track of contributions throughout the year can help avoid discrepancies later.
Drawing and Disbursing Officers (DDOs) should ensure the correct GPF schedule accompanies salary bills and that interest calculations continue at the notified rate of 7.1%. Completing or updating the e-nomination is equally important, as an accurate nomination can help minimise delays in the settlement of claims.
EPF subscribers should periodically review their EPF passbooks to ensure interest is credited correctly. GPF subscribers can use the Accountant General portal or the official GPF services provided by their respective state or department to access account information and complete eligible service-related requests.
Another point worth remembering is that, under the applicable GPF rules, interest on final withdrawals continues to accrue until the date of payment. With the interest rate unchanged for the July-September quarter, eligible GPF subscribers can continue planning their retirement savings with greater certainty while ensuring their contributions, nominations and account records remain up to date.
Image Courtesy: Meta AI
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