The Employees' Provident Fund Organisation (EPFO) has maintained the interest rates on provident fund deposits at 8.5 per cent for 2020-21, the same as last fiscal 2019-20, Labor Minister Santosh Gangwar told NDTV. The decision was taken at a meeting of the Central Board of Trustees held in Srinagar under the chairmanship of the Labour Minister.
Chief Labour Commissioner and DG Labour Bureau DPS Negi told NDTV, "The decision (on 8.5 pr cent interest rate) will be implemented after gaining approval from the Ministry of Finance. The decision comes at a time when there is an improvement in the economic situation. A total of about 5 crore EPF account holders in the country will benefit from this decision."
"Despite difficult circumstances even during corona crisis, the government had given 8.5 per cent interest payment to 5 crore account holders. EPFO will save nearly 250 crore balance corpus after paying 8.5 per cent interest payment to the EPF account holders for 2020-2021," Mr Negi added.
There were speculations that the EPFO would lower interest on provident fund deposits for this fiscal (2020-21) due to withdrawals and lesser contribution by members amid the coronavirus pandemic.
In March last year, EPFO had lowered the interest rates on provident fund deposits to a seven-year low of 8.5 per cent for 2019-20, from 8.65 per cent in 2018-19.
The EPFO had provided 8.65 per cent interest rate to the subscribers in 2016-17 and 8.55 per cent in 2017-18. The rate of interest was slightly higher at 8.8 per cent in 2015-16.
In Budget 2021, Finance Minister Nirmala Sitharaman had announced that provident fund subscribers who invest more than Rs 2.5 lakh in their provident fund accounts in a year will not be able to earn the mandated 8.5 per cent tax-free return from next month. Interest earned on amount exceeding Rs 2.5 lakh will be taxable as per the budget announcements for next financial year, which starts from April 1.
EPFO is the nodal body of Employees' Provident Fund, with more than five crore active subscribers.