EPFO fixes Employees' Provident Fund interest rate for 2023-24 at three-year high; details here

EPFO fixes Employees’ Provident Fund interest rate for 2023-24 at three-year high; details here

The Employees’ Provident Fund Organisation (EPFO) has announced a three-year high interest rate of 8.25% on employees’ provident fund (EPF) deposits for the fiscal year 2023-24. This decision was made by the EPFO’s apex decision-making body, the Central Board of Trustees (CBT), during their meeting on Saturday. The interest rate for the previous fiscal year, 2022-23, was marginally increased to 8.15% from 8.10% in the year before.

This decision comes amidst robust financial performance by EPFO, bolstered by investments in equity and minimal Covid-related withdrawals, according to ET.

In 2021-22, the EPFO had lowered the interest rate on EPF to a four-decade low of 8.1%, which was the lowest since 1977-78 when the interest rate stood at 8%, according to a PTI report.

However, for the fiscal year 2020-21, an interest rate of 8.5% was provided. The interest rate for each fiscal year is decided by the CBT and then sent to the Ministry of Finance for approval.

Once the government ratifies the interest rate, it will be credited to the accounts of over six crore subscribers of EPFO. It is important to note that EPFO provides the rate of interest only after it is approved by the government through the finance ministry.

Over the years, the interest rate on EPF deposits has varied. In 2019-20, the interest rate was lowered to 8.5%, the lowest in seven years, from 8.65% in the previous fiscal year. In 2016-17 and 2017-18, the interest rate provided was 8.65% and 8.55% respectively. The rate was slightly higher at 8.8% in 2015-16. In the fiscal years 2013-14 and 2014-15, the interest rate was 8.75%, which was higher than the 8.5% provided in 2012-13. In 2011-12, the interest rate was 8.25%.

Once notified, the 8.25% interest rate will be applicable to voluntary provident fund (VPF) deposits as well. Additionally, exempted trusts are mandated to credit interest at the same rate as EPFO to their employees.

The Employees’ Provident Fund (EPF) is compulsory for salaried employees in organizations with 20 or more workers. As per the EPF&MP Act, employees contribute 12% of their wages monthly to the EPF account, matched by an equal contribution from the employer.

While the full employee contribution goes into the EPF account, only 3.67% of the employer’s share is deposited into the EPF account, with the remaining 8.33% allocated to the Employees Pension Scheme (EPS).

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