Interest rates of provident fund might increase to 8.95% from 8.75% earlier
DNA WEB TEAM | Fri, 22 Jan 2016-09:47am , Mumbai , dna web desk
The interest rates of provident fund might increase to 8.95% from 8.75% earlier. The Employees Provident Fund Organisation’s (EPFO) finance panel has recommended the increase in interest rates on statutory savings of over 5 crore subscribers to 8.95% in the current fiscal, according to a leading news agency.
The central board of trustees have endorsed the proposal and is yet to get the finance ministry nod. If the proposal is approved then it will be the highest return since 2011 when the interest rates were 9.5% and the highest ever real interest rate, said the report.
The 8.95% interest rate will translate into returns of nearly 12% for the highest slab as withdrawals and interest earnings do not attract tax at the time of withdrawal.
The government and the Reserve Bank of India (RBI) are looking at reducing deposit rates in order for banks to cut lending rates and push investment. The move to increase the interest rates on EPF deposits may result in a diversion of bank discounts or other small saving schemes.
The finance ministry is expected to lower the interest rates on many small savings schemes by up to 50 basis points.
The EPFO’s, which is a basic investment for many employees, increase in interest rates might face some resistance from the finance ministry. However, it might go through as the middle class depends on it for savings.