The EPFO has increased the rate of interest on PF during this year. Earlier the rate of interest on PF was 8.75% and now it is increased to 8.80 per cent. The increase in PF interest is going to benefit more than 40 million EPF members in above 8.50 lakhs companies. The announcement came this year after the new budget’s propositions. Besides the increase in PF interest rate, improvements are being done to centralize the EPFO database. The EPF interest rate and the PF withdrawal rules are supervised and revised every year. This post shares how the increase of the interest rate will be benefitting the employees.
Most of the EPF members are not aware about the tax exemptions and interest rates on their PF contributions. The increase in the interest rate has cheered many. See how it will make your retirement saving more attractive. Actually the increase has come when the overall interest rates on different small saving instruments are reduced. . Now a days EPF online payment is also possible by net banking or debit/credit card.
What is EPF Interest Rate
Every month a portion or 12% of the employee’s basic salary is deducted and deposited to the EPFO account of employee. The same amount is contributed by the employer. The contributions to the EPF are compounded at a rate as declared by the EPFO. The rate is declared or changed on the yearly basis. Go here for those who are having salaries more than Rs. 15,000 a month, can choose for not joining the EPF scheme. But those who are already a member cannot opt out, regardless of the salary.
Besides the net contributions from employee, employer and the government, the interest is earned on the accumulated EPF amount. If you will check your annual EPF slip carefully, you will find that only the PF amount details are mentioned there. The interest is than calculated separately on the employee’s contribution as well on the employer’s contribution. Hence, the EPF amount earns interest in both the ways. Besides, the interest rate, the tax exemptions are also making the EPF retirement saving scheme the popular scheme. There is no tax on PF withdrawal after 5 years of the service. Keep following our posts for all news on EPF and NPS.