The new budget brings about a lot of changes in the EPF rates. This article deals with the amendments and declaration by the Government of India. In the year 2015-2016, the EPF interest rate was 8.8%. For the year 2016-17, the EPF interest rate was 8.65%, and for 2017-2018 the rate is 8.55%. Therefore, people expected that the rate will decrease for the succeeding year as well. But, then the same did not happen. when the latest EPF interest rate 2018-19 was announced.
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Why is there an increase in the EPF interest rate of 2018-19?
The Labour Minister of India, Mr Santosh Gangwar, had made a proposal in February of 2019. The issue was that the EPF interest rate for 2018-19 was expected to increase to 8.65%. However, the approval from the Finance Ministry was still pending. Later, the Finance Ministry made an agreeable decision and was in consent with the Labour Minister for increasing EPf interest rate of 2018-19. This concludes that for the year 2018-2019, all EPF subscribers will receive 8.65% as the interest rate.
It is for the first time in three years, that we are witnessing a hike in the EPF interest rate. Otherwise, we were only observing a decrease in the EPF rate. If you want to know why the rate of interest was coming down, then let us go through the estimates of EPF. If they were levying an interest of 8.65%, the EPF would have a surplus of Rs 151.67 crore. However, if this rate was increased even slightly to anywhere close to 8.7% then the EPF would face a deficit of Rs 158 crores. The EPf interest rate is decided according to the earnings and the capacity of the EPFO.
Financial Services and their Activities
For the year 2017-2018, the EPF interest rate was 8.55%, which was the lowest in the last five years. So, people got some relief that the rate didn’t come down but went on to rise. After the approval of the Department of Financial Services, the Income Tax department and the Labour Ministry also approves the increase. Following this, the EPFO is going to extend the directions to more than 120 field offices to credit the interest rate to its members and settle their claims accordingly.
So, if your interest is not yet credited, you will get it soon as soon the process of the three approval activities are over. This confirms that the EPF interest rate for 2018-19 will be 8.65% and it will be enjoyed by all the EPF members very soon.
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