EPFO Likely To Credit 8.5% Interest In Employees’ Provident Fund By December
Retirement fund body EPFO is likely to credit 8.5% interest for 2019-20 in the employees' provident fund (EPF) accounts of around six crore subscribers in one go by the end of December.
The Employees Provident Fund Organisation had earlier decided to split 8.5% interest into two installments of 8.15% and 0.35% in its trustees meet headed by Labour Minister Santosh Gangwar.
A highly placed source told PTI that the Labour Ministry has sent a proposal to the Finance Ministry to give concurrence to credit 8.5% rate of interest on EPF for 2019-20 earlier this month.
The source further said that earlier the Ministry of Finance had sought some clarifications on the rate of interest for the last fiscal, which were duly addressed.
In March this year, the EPFO's apex decision making body Central Board of Trustees headed by Labour Minister Santosh Gangwar had approved 8.5% interest rate on EPF for 2019-20.
The labour ministry had then explained that "in view of exceptional circumstances arising out of COVID-19, the agenda regarding interest rate was reviewed by the CBT and it recommended the same rate of 8.50% to the Central Government.
"It (8.5% interest) would comprise of 8.15% from debt income and balance 0.35% (capital gain) from the sale of ETFs (exchange traded funds) subject to their redemption by 31st December, 2020," it had said.
The CBT had recommended accounting such capital gains (from sale of ETFs) in the income of the financial year 2019-20 as being an exceptional case.
As planned earlier, the EPFO had to provide 8.15% interest on EPF soon after seeking Ministry of Finance nod. It has planned to credit the remaining 0.35% rate by December 31, after proposed liquidation of ETFs.
The EPFO had earlier planned to liquidate some of its investment in ETFs to provide 8.5% interest for the last fiscal.
However, it could not do so because of the choppy market conditions amid the lockdown, induced by COVID-19.
The source also told that since the market conditions are more than favourable as bench mark indices are at record high, there should not be an issue to credit entire 8.5 per cent in one go.