New Delhi : In the third rollback on Employees Provident Fund on Friday, the government quashed the Finance Ministry’s recent decision to slash the interest rate on deposits from 8.8% to 8.7% for 2015-16.
The about-turn came in the wake of a day-long nationwide protest called by the central trade unions against the finance ministry trying to tweak the 8.8% interest rate recommended by the Central Board of Trustees (CBT), the apex decision body of EPF.
The Labour Ministry too had backed 8.8% interest rate, as recommended by the CBT headed by Labour Minister Dattatreya. The unions went on protest despite him giving an assurance on Thursday that he would speak to Finance Minister Arun Jaitley to rescind the lowering of the interest rate.
The government’s first rollback was on a decision announced by Jaitley in his budget proposals to tax 60% of provident fund deposit unless put in the pension schemes. He was forced to quash the decision on March 9.
The second rollback came on April 20 when the new norms on the PF withdrawals were scrapped after violent protests in Bengaluru. The government had tried to raise the age limit to 58 for any employee wanting to withdraw the employer’s share from his account. It restored the old rule to allow an employee to withdraw 100 per cent of his savings in provident fund after being jobless for more than two months.
Any private firm with more than 20 employees has to participate in the scheme run by Employees’ Provident Fund Organization. A percentage of the employees’ salary is set aside in an account and it accrues interest. Employers have to make a matching contribution.
The interest rate is revised by the government every year.