Labour Minister Bandaru Dattatreya yesterday said that the Finance Ministry has approved 8.65% interest rate on EPF deposits for 2016-17. The minister's statement has laid to rest apprehensions among formal sector workers that they would get lower rate of interest than the 8.65% approved by the Employees' Provident Fund Organisation's (EPFO) trustees in December last year.
The ratification of the 8.65% interest on EPF will enable the retirement fund body EPFO to credit this rate of return into the accounts of four crore subscribers. "Finance Ministry has agreed to 8.65% rate of interest. Now, the communication will come. The formal discussions are over," the minister said on the sidelines of National Safety Awards function.
"We will immediately issue the notification and credit the rate of interest to over four crore subscribers," he added. The minister also said that the bill to amend payment of gratuity Act in order to double the ceiling of tax-free gratuity to Rs 20 lakh, would soon be placed before the Union Cabinet for approval.
The Employees' Provident Fund Organisation trustees had approved 8.65% rate on EPF in December last year. The Finance Ministry has been nudging the Labour Ministry to lower the EPF rate for aligning it with the rates of small savings schemes like PPF.
Earlier, a source had said that in a communication to the Labour Ministry, the Finance Ministry has asked the former to provide the rate of interest approved by the EPFO trustees, provided there must not be any deficit to the fund. Dattatreya has been maintaining that EPFO subscribers be provided 8.65% rate of interest for 2016-17.