The government on Monday ratified the decision declared in March to increase the interest rates to 8.15 per cent on deposits under the Employees Provident Fund (EPF). PTI reported that the EPF rates have increased from a four-decade low of 8.10 per cent for FY 2021-22.
On March 28, 2023, the Employees Provident Fund Organisation (EPFO) decided to increase the rates to 8.15 per cent for 2022-23, subject to final government approval that came today.
As per the report, the employees’ provident fund (EPF) currently has over six crore subscribers.
After Monday’s ratification, the EPFO has asked its field offices to credit the interest at 8.15 per cent into the members’ accounts on EPF deposits for 2022-23, an official was quoted as saying.
The finance ministry’s decision came after the EPFO trustees approved the rate hike. Now the EPFO field offices are expected to start crediting the interest to the subscribers’ accounts.
In March 2022, EPFO reduced the rate to a 4-decade low of 8.10 per cent for FY2021-22 from 8.5 per cent in FY2020-21, the lowest since 1977-78, when it was 8 per cent, the report said.
The Central Board of Trustees (CBT) of the EPFO is the apex decision-making body of the organisation headed by the Union Labour and Employment Minister.
March 2023 Order
While passing its decision, CBT noted that the interest rate at 8.15 per cent and “the surplus of Rs 663.91 crore are higher than the last year.” It added that EPFO could distribute higher income to its members through the various economic cycles with minimal credit risk.
“Considering the credit profile of the EPFO investment, the interest rate of EPFO is higher than other comparable investments avenues available for subscribers,” it said.
EPF Contributions
Contributions to the EPF fund are mandatory for both employees and employers.
Contributions to EPF are mandatory for salaried employees. Employers are also required to make a matching contribution to the EPF account of the employee. While employees contribute 12 per cent of their wages to their EPF accounts, employers contribute 3.67 per cent to the EPF account, and the balance of 8.33 per cent goes towards the Employees’ Pension Scheme (EPS). Interest earned will be taxable if the total deposits in an EPF and voluntary provident fund (VPF) account exceed Rs 2.5 lakh in a financial year.
