EPFO lowers the interest rate on PF deposits to 8.5% for FY 2019-20

The Employees’ Provident Fund Organisation (EPFO) has notified the interest rate for the FY 2019-20 at 8.5%. The rate is lowered by 0.15% from the rate of 8.65% notified for FY 2018-19. 

The interest is credited to the employees PF balances on 31 March of each financial year. For the FY 2019-20, the interest will be credited at 8.5% on 31 March 2020.

The apex body – Central Board of Trustee of the EPFO fixes the interest rate in the yearly meeting. The PF interest rate applies to employees’ provident fund balances with the EPFO held during the financial year.

Also Read: EPFO Undertaking Several Digital Initiatives for Subscribers’ Convenience

EPFO functions under the Labour Ministry. The Finance Ministry has been in talks with the Labour Ministry to lower the interest rate on EPF balances in line with other small savings schemes. The government savings schemes of PPF, NSC, and SSY fetch between 7.9% to 8.5%. 

The interest rate of 8.5% for EPF balances is still the highest amongst government savings schemes for employees. The employees’ contribution to EPF is also eligible for deduction under section 80C up to Rs 1.5 lakh. 

The interest rate has been above 8.5% since FY 2013-14. The lowering of the rate by 0.15% will leave EPFO with a surplus of Rs 700 crore.

In the latest news, EPFO decided to pay the interest due for FY 2019-20 in two instalments of 8.15% and 0.35%. The first instalment of the EPFO interest is due immediately as per the EPFO Board meeting of September 2020. The second instalment of the EPFO interest is due in December 2020.

For any clarifications/feedback on the topic, please contact the writer at sweta.dugar@cleartax.in

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