New Delhi : Labour Minister Bandaru Dattatreya said on Thursday that the Finance Ministry has approved 8.65 per cent interest rate on EPF deposits for 2016-17.
The minister’s statement has laid to rest apprehensions among formal sector workers that they would get lower rate of interest than the 8.65 per cent approved by the Employees’ Provident Fund Organisation’s (EPFO) trustees in December last year.
The ratification of the 8.65 per cent interest on EPF will enable the retirement fund body EPFO to credit this rate of return into the accounts of four crore subscribers.
The Labour Minister also said that the Bill to amend payment of gratuity Act in order to double the ceiling of tax-free gratuity to Rs 20 lakh, would soon be placed before the Union Cabinet for approval.
Though the EPFO trustees had approved 8.65 per cent rate on EPF in December last year, the Finance Ministry has been nudging the Labour Ministry to lower the rate for aligning it with the rates of small savings schemes like PPF.
Earlier, a source had said that in a communication to the Labour Ministry, the Finance Ministry has asked the former to provide the rate of interest approved by the EPFO trustees, provided there must not be any deficit to the fund. Dattatreya has been maintaining that EPFO subscribers be provided 8.65 per cent rate of interest for 2016-17.
As per the practice, the board’s decision is concurred by the Finance Ministry after evaluating whether the EPFO would be able to provide the rate approved by trustees through its own income or not.