Finance ministry fixes EPF rate at 8.65%
Labour Minister Bandaru Dattatreya said the finance ministry had approved an 8.65 per cent interest rate on Employees’ Provident Fund (EPF) deposits for FY17. His statement has laid to rest apprehensions among the formal sector workers that they would get a lower rate of interest than the 8.65 per cent, approved by the EPFO trustees in December.
Union labour minister Bandaru Dattatreya on Thursday said the central finance ministry has approved 8.65 per cent interest on Employees' Provident Fund (EPF) deposits for 2016-17.
The minister's statement has laid to rest apprehensions among formal sector workers they would get lower rate of interest than the 8.65 per cent approved by Employees' Provident Fund Organisation (EPFO)'s trustees in December last year.
The approval of the 8.65 per cent interest on EPF will enable the retirement fund body EPFO to credit this rate of return into the accounts of forty million subscribers.
"Finance ministry has agreed to 8.65 per cent rate of interest. Now, the communication will come. The formal discussions are over," the minister said on the sidelines of National Safety Awards function. "We will immediately issue the notification and credit the rate of interest," he added.
The minister also said that the bill to change payment of gratuity Act in order to double the ceiling of tax-free gratuity to ~20 lakh, would soon be placed before the Union Cabinet for approval.
EPFO trustees had approved 8.65 per cent rate in December last year. The finance ministry has been nudging the labour ministry to lower the EPF rate for aligning it with the rates of small savings schemes like Public Provident Fund.
Earlier, a source had said that in a communication to the labour ministry, the finance ministry had asked the former to provide the rate of interest approved by the EPFO trustees, provided there must not be any deficit to the fund.
Dattatreya had been maintaining that EPFO subscribers be provided 8.65 per cent rate of interest for 2016-17.
"The Central Board of Trustees had decided to give 8.65 per cent. We would have surplus of ~158 crore on providing 8.65 per cent. I have requested them to approve 8.65 per cent. In any case, this amount (interest income) will be given to workers," Dattatreya had said earlier this month.