There is good news for employees that the Modi government is going to keep the interest rate on the provident fund as unchanged. This is according to the latest report of Indian Express. It is known that the ruling BJP as well as NDA dispensation has started working on this and they are to continue the same rate as the previous year. The level of interest rate is 8.65 percent. It is likely that the government is going to dip in the shares held by EPFO or Employees Provident Fund Organization for the payout of extra 0.15 %. It is known from some sources that the government is planning to sell the shares that EPFO bought since 2015 to be able to pay for 8.65 %. The shares of worth 2000 Crores are likely to be sold by the EPFO. The extra income booked by this will be near 850 Crores. The gain of 850 Crores is additional and will be used to determine the PF rate.
According to the report the “Central Board of Trustees of EPFO” will have a meeting next month to decide the PF rates as well as share sale modalities. They will be asking the fund managers to reduce their commission so as to pass on maximum benefits to the subscribers of PF. It is also said that the final rate will depend on the share price on the day of sale and there can be minute changes in the figure which will be arrived at. It is also said that they are having a goal of keeping the interest rate unchanged from the last year.
The funds in the early years provided an interest of 8.65 % for the financial year 2016-2017 which was 8.8 % in year 2015-2016 and was 8.75 % in the year 2013-2017-4 and 2014-2015.
It was the view earlier that the retirement fund body EPFO is going to lower the interest rates on the provident funds this year as compared to 8.65 % of the year 2016-2017.
It was likely that the EPFO or Employees Provident Fund organization was going to cut the interest rates on the basis of direct crediting the ETF or Exchange Trade funds units in the PF accounts. The other reason was the lower yield on other investments like bonds. It was stated by the official that the present year’s income of the EPFO will decide the actual interest that will be given to the subscribers.
But now, it is more likely that the interest rate on the PF will remain same as the previous year. This is the outcome based on the recent report from India today. However the actual rates will be disclosed after the end of the financial year.