Retain interest rate at 8.25% for current FY: EPFO board

NEW DELHI: The central board of trustees of the Employees Provident Fund Organisation on Friday really useful retaining the interest rate at 8.25% for the current monetary yr, a choice that have to be ratified by the finance ministry earlier than cash is credited into the accounts of seven crore subscribers.
“Compared to many other fixed-income instruments, the Employees Provident Fund (EPF) offers relatively high and stable returns, ensuring steady growth of savings. The interest earned on EPF deposits is tax-free (up to a specified limit), making it a highly attractive investment option for salaried individuals. This reflects strong confidence in the credit profile of EPFO’s investments and its ability to deliver competitive returns to its members,” an official assertion mentioned.
A couple of years in the past, the finance ministry launched tax on interest earnings earned by those that contribute over Rs 2.5 lakh yearly, arguing that the transfer would have an effect on only one% subscribers.
At 8.25%, EPFO’s returns are considerably larger than of public provident fund, the place the charges are presently pegged at 7.1%. PPF, which comes with an annual funding cap of Rs 1 lakh, additionally presents good thing about compounding.
While some banks are providing over 8% on mounted deposits, SBI is providing 7.5% within the two- to three-year bucket, however the interest earnings might be taxed, and there’s no good thing about compounding. Someone within the 30% tax bracket will see a 5.25% post-tax return of FD.
Given the volatility within the inventory markets, parking cash in small financial savings devices in addition to EPFO by the voluntary contribution route might not be a foul concept for a couple of months.
Separately, the EPFO board additionally introduced amendments to the Employees’ Deposit-Linked Insurance (EDLI) scheme, together with a minimal good thing about Rs 50,000 to an EPF member who dies with out finishing one yr of steady service. “This amendment is expected to result in higher benefits for more than 5,000 cases of deaths in service, every year,” the official assertion mentioned.
Besides, EDLI profit might be admissible if a member dies inside six months of his or her final contribution.
Further, the EPFO board has really useful modifications to the continual service clause. Earlier, a niche of even a day or two, reminiscent of weekends or holidays, between jobs led to the denial of EDLI advantages because the situation of steady service of 1 yr was not met. Now, a niche of as much as two months between two spells of employment might be thought-about as steady service.