Organisation (EPFO) has announced a three-year high
interest rate
of 8.25% on employees’ provident fund (EPF) deposits for the
fiscal year
2023-24. This decision was made by the
EPFO
‘s apex decision-making body, the Central Board of Trustees (
CBT
), during their meeting on Saturday. The interest rate for the previous fiscal year, 2022-23, was marginally increased to 8.15% from 8.10% in the year before. This decision comes amidst robust financial performance by EPFO, bolstered by investments in equity and minimal Covid-related withdrawals, according to ET.
In 2021-22, the EPFO had lowered the interest rate on EPF to a four-decade low of 8.1%, which was the lowest since 1977-78 when the interest rate stood at 8%, according to a PTI report. However, for the fiscal year 2020-21, an interest rate of 8.5% was provided. The interest rate for each fiscal year is decided by the CBT and then sent to the Ministry of Finance for approval.
Once the government ratifies the interest rate, it will be credited to the accounts of over six crore subscribers of EPFO. It is important to note that EPFO provides the rate of interest only after it is approved by the government through the finance ministry. Over the years, the interest rate on EPF deposits has varied. In 2019-20, the interest rate was lowered to 8.5%, the lowest in seven years, from 8.65% in the previous fiscal year. In 2016-17 and 2017-18, the interest rate provided was 8.65% and 8.55% respectively. The rate was slightly higher at 8.8% in 2015-16. In the fiscal years 2013-14 and 2014-15, the interest rate was 8.75%, which was higher than the 8.5% provided in 2012-13. In 2011-12, the interest rate was 8.25%.
Once notified, the 8.25% interest rate will be applicable to voluntary provident fund (VPF) deposits as well. Additionally, exempted trusts are mandated to credit interest at the same rate as EPFO to their employees. The Employees’ Provident Fund (EPF) is compulsory for salaried employees in organizations with 20 or more workers. As per the EPF&MP Act, employees contribute 12% of their wages monthly to the EPF account, matched by an equal contribution from the employer. While the full employee contribution goes into the EPF account, only 3.67% of the employer’s share is deposited into the EPF account, with the remaining 8.33% allocated to the Employees Pension Scheme (EPS).
Union Budget 2024: The standard deduction for family pensioners has also increased from ₹15,000 to ₹25,000.
While presenting the Union Budget for 2024-25 in the Lok Sabha, finance minister Nirmala Sitharaman announced an increase in the standard deduction for salaried employees from ₹50,000 to ₹75,000 under the new income tax regime for Fiscal Year 2025.
