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EFPO Reduces Interest Rate on PF, Shock to 6 Crore Employees

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Modi government has reduced the interest rate on Employees Provident Fund (EPF) for 2019-20. The government has now reduced the interest rate on PF to 8.50 percent. This interest rate was 8.65 percent in the last financial year 2018-19. Labor Minister Santosh Gangwar gave this information on Thursday. This decision of the government has caused a big setback for about six crore shareholders of Employees Provident Fund Organization (EPFO).

Labor Minister Santosh Gangwar said after the meeting, “EPFO has decided to pay 8.5 percent interest on provident fund deposits for 2019-20 in the meeting of CBT today. The minister said that EPFO ​​will have a surplus of Rs 700 crore by paying 8.5 percent interest on Employees Provident Fund deposits in the current financial year. A source in the ministry said, “Had the EPFO ​​paid 8.55 per cent interest, it would have had a surplus of Rs 300 crore. The EPFO ​​would have lost out on paying more interest.”

Ministry of Finance has been asking the Ministry of Labor for a long time to make interest on Provident Fund similar to other small savings schemes like Public Provident Fund, Post Office Savings Schemes. EPFO paid 8.65 percent interest on provident fund in fiscal year 2016-17 and 8.55 percent in 2017-18. Whereas in 2015-16 it was 8.8 percent per annum. Earlier, 8.75 per cent interest was paid on provident fund in 2013-14 and 2014-15 and 8.5 per cent in 2012-13.