Central Board of Trustees (CBT) on Wednesday recommended a one percentage point hike in the interest rate on employee’s provident fund (EPF) to 9.5 per cent. This would make EPF the most lucrative risk-free tax savings option.The announcement came after a meeting between Labour Minister Mallikarjun Kharge and the central board of trustees (CBT), the decision-making authority of the Employees Provident Fund Organisation (EPFO).
The EPFO currently manages a corpus of about R3.17 lakh crore. About 5.80 lakh establishments offer EPF benefits to its employees in India.
Interest rate earned on EPF had remained unchanged at 8.5 per cent since 2005-06.
Employees of these organisations have to compulsorily park 10 per cent of their basic salary in EPF with their
employers making a matching contribution.
Employees have the option of increasing their EPF contribution to 100 per cent of their basic salary but employers need not match the enhanced contribution.
Minister of state for labour Harish Rawat said the interest rate offered in the employees’ provident fund has been increased by 1 percentage point to 9.5 per cent for the fiscal year that ends in March 2011.
The latest hike would make EPF the most attractive savings option for the salaried class.
