The Employee Provident Fund Organisation board recommended that the interest rate on PF deposits remain the same as that of the last financial year.
The Employees’ Provident Fund Organisation (EPFO) announced the interest rates on Provident Fund deposits for the financial year 2020-21 on March 4. The EPFO board has recommended 8.5 percent interest for the financial year 2020-21, same as 2019-20.
Speculations about lower interest on provident fund deposits due to the economic downfall and coronavirus pandemic were making the rounds. However, the rate has been kept unchanged.
The decision was taken at the 228th meeting of Central Board of Trustees, held in Srinagar under the chairmanship of Santosh Kumar Gangwar, Union Minister of State for Labour and Employment.
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“People must appreciate that the government has maintained the rate of interest for 2020-21 despite a huge economic downturn due to COVID-19,” said Virjesh Upadhyay, EPFO Board Member and General Secretary of Bharatiya Mazdoor Sangh.
Last year, in March, EPFO had reduced the interest rate on provident fund deposits to a seven-year low of 8.5 percent for 2019-20.
The board had earlier said that it would pay 8.5 percent interest to its subscribers for the year ended 31 March in two instalments — 8.15 percent from debt investments and 0.35 percent from equity.
For the financial year 2018-19, the interest rate was fixed at 8.65 percent. The EPFO had provided an 8.55 percent interest rate to its subscribers for 2017-18 and an interest rate was 8.65 percent for the financial year 2016-17.
In Budget 2021, Finance Minister Nirmala Sitharaman had announced that the depositors investing more than Rs 2.5 lakh in EPF in a year would have the interest liable for tax from April 1.
“In order to rationalise tax exemption for the income earned by high-income employees, it is proposed to restrict tax exemption for the interest income earned on the employees’ contribution to various provident funds to the annual contribution of Rs 2.5 lakh. This restriction shall be applicable only for the contribution made on or after 01.04.2021,” Sitharaman said in the budget speech.