Bad news for salaried employees as they could face a cut in interest on their provident fund (PF) deposits for FY20. The Central Board of Trustees of Employees Provident Fund Organisation (EPFO) has recommended interest rate of 8.5% - the lowest interest rate in over five years - on provident fund deposits to around six crore subscribers for the current financial year, PTI reported.
"The EPFO has decided to provide 8.5 per cent interest rate on EPF deposits for 2019-20 in the Central Board of Trustees (CBT) meeting today," Gangwar told reporters after the meeting.
This is lower than the 8.65% interest rate given on employee provident fund (EPF) deposits for the previous financial year 2018-19.
The central board of trustees of the EPFO comprising representatives of employees, employers and governments both at the centre and some member states met on Thursday to take a call on several issues including the much-awaited interest rate for 2019-20.
After the meeting, the labour minister stated that the new EPF Interest Rate would stand at 8.50% rather than 8.65%.
Now, the labour ministry requires the finance ministry's concurrence on the matter. Since the Government of India is the guarantor, the finance ministry has to vet the proposal for EPF interest rate to avoid any liability on account of shortfall in the EPFO income for a fiscal.
The finance ministry has been nudging the labour ministry for aligning the EPF interest rate with other small saving schemes run by the government like the public provident fund and post office saving schemes.
The EPFO had provided 8.65 per cent rate of interest to its subscribers for 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. It had given 8.75 per cent rate of interest in 2013-14 as well as 2014-15, higher than 8.5 per cent for 2012-13.
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