EPF Interest Rate: Interest on PF will get reduced, shock for many

EPF Interest Rate

EPF Interest Rate: Crores of people working in the private sector (Pvt Sector) are going to get a big shock soon. A decision is going to be taken this month regarding the rate of interest on PF. There is a possibility that EPF Interest Rate may be reduced further for the current financial year. This news from the sources is disappointing because PF is already getting the lowest interest in 43 years.

Employee Provident Fund (EPF) is a savings scheme for retirement regulated by the Employees Provident Fund Organisation (EPFO). Under this scheme, the employer and employee contribute monthly in equal proportions of 12% of basic salary and dearness allowance. The money contributed earns an interest rate which is announced by the government every year.

Read Also: Income tax rule on dividend stocks, bonus shares, buyback

Labour and Employment Minister Bhupender Yadav had said that the rate for FY23 will be determined on the basis of contributions and withdrawals. “It should be appreciated that the interest is determined based on the contributions received in EPF accounts, withdrawals made by EPF members, income received during the year. Rate will be recommended before the close of the financial year as per the scheme provisions. Hence, it will be taken up in CBT during the concluding month of the financial year,” he had said.

Read Also: 8 important tasks you must do before March end: To do list

EPF Interest Rate reduced over the time

Currently, EPFO ​​has more than six and a half crore subscribers. At the same time, the rate of interest available on PF is at the lowest level in many decades. EPFO had fixed the rate of interest of PF at 8.1 per cent for 2021-22, which is the lowest rate of interest on PF after 1977-78. Earlier in 2020-21, interest was being received on PF at the rate of 8.5 per cent. There was no change in the rate of interest of PF in the fiscal year 2020-21. Just a year before this, in 2019-20, this interest rate was reduced from 8.65 per cent to 8.5 per cent.

In March 2022, the CBT had recommended a four-decade low interest rate of 8.1 per cent for over 6 crore active subscribers of the EPFO for the financial year 2021-22, leaving it with an estimated surplus of Rs 450 crore. In June 2022, the finance ministry had then ratified the interest rate. FY22 was the first financial year when the Centre’s proposal to tax interest on higher contributions to the EPF came into effect. Several subscribers had reported delays in crediting of interest rate for FY22.

Read Also: Higher Pension Scheme by EPFO : Last date, benefits eligibility

EPF Interest Rates History

The following table shows the EPF interest rate for the 10 years – 

Financial YearEPF Interest Rate
FY 2022-20238.10%
FY 2021-20228.10%
FY 2020-20218.50%
FY 2019-20208.50%
FY 2018-20198.65%
FY 2017-20188.55%
FY 2016-20178.65%
FY 2015-20168.80%
FY 2014-20158.80%
FY 2013-20148.80%
FY 2012-20138.50%

The FY 2021-22 EPF interest rates are as per the date March 12, 2022.

Read Also: PPF vs EPF : Difference between EPF and PPF

Crores of people will be harmed

Now it is being told that the meeting of EPFO ​​is going to be held on March 25-26, in which a decision can be taken regarding the interest. According to the news published in an English newspaper, the interest on PF can be further reduced to 8 percent. According to the news, Lok Sabha elections are going to be held next year. Before that, assembly elections will also be held in many important states. For this reason, there is no scope to reduce the interest on PF much, but it is possible to reduce it as compared to last year. If this happens, then crores of people working in the private sector are going to suffer a direct loss.

EPFO invests in these places

Let us tell you that Employees Provident Fund Organization i.e. EPFO ​​invests the amount deposited in the account of PF account holders in many places. A part of the earnings from this investment is returned to the account holders in the form of interest. At present, EPFO ​​invests 85 per cent in debt options, which include government securities and bonds. The remaining 15 per cent is invested in ETFs. PF interest is decided on the basis of earnings from debt and equity.

Read Also: Post Office Savings Account: 8 must-know charges

EPF Contribution Rate FY 2021-22

The contributions made by employer and employee towards the EPF account is the same. The following table shows the monthly contribution percentage – 

ContributionMonthly Percentage
Total contribution in EPF account24%

How to check PF balance

  • Go to the website of EPFO.
  • Select ‘For Employees’ from the dropdown of ‘Our Services’.
  • Click on Member Passbook.
  • Login with the help of UAN number and password.
  • Choose the PF account and you will see the balance as soon as you open it.
  • To check balance through SMS, send the message ‘EPFOHO UAN ENG’ to 7738299899.

Get Daily Updates in Hindi & English 

Join Tax solution subscription

GST Latest news
Disclaimer:The article or blog or post (by whatever name) in this website is based on the writer’s personal views and interpretation of Act. The writer does not accept any liabilities for any loss or damage of any kind arising out of information and for any actions taken in reliance thereon. 
Also, www.babatax.com and its members do not accept any liability, obligation or responsibility for author’s article and understanding of user.

For Collaborating with us-

Tags: blog

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Fill out this field
Fill out this field
Please enter a valid email address.
You need to agree with the terms to proceed