EPFO interest rate : The circular related to the announcement of increase in interest rates received on EPFO account has been issued on 24 July. Significantly, under the Employees’ Provident Fund Organisation,
The government has approved 8.15% interest on Provident Fund (PF) account for the financial year 2022-23. The Employees’ Provident Fund Organization (EPFO) had recommended raising interest rates by 0.05% in March. That is, if you have a deposit of Rs 1 lakh, then you will get an interest of Rs 8,150 in a year. EPFO issued its order on 24 July (Monday).
More than 6 crore employees of the country come under the ambit of PF. Under the EPFO Act, 12% of the basic salary plus DA of the employee goes to the PF account. The company also contributes 12% of the employee’s basic salary plus DA. Out of the 12% contribution of the company, 3.67% goes to the PF account and the remaining 8.33% goes to the pension scheme.
EPFO interest rate : Started in 1952 with 3% interest
In 1952, the interest rate on PF was only 3%. However, after this it kept increasing. For the first time in 1972, it reached above 6%. In 1984, it reached above 10% for the first time. The best time for PF holders was from 1989 to 1999.
During this, 12% interest was available on PF. After this the interest rate started declining. Interest rates have never been close to 10% since 1999. It has remained below 9.50% since 2001. It has been at or below 8.5% for the last seven years.
Understand here how much more interest will be available on PF now
Suppose a total of Rs 5 lakh is deposited in your PF account till March 31, 2023. In such a situation, if interest was received at the rate of 8.10%, then Rs 40,500 would have been received as interest on Rs 5 lakh. But now after increasing the interest rate to 8.15%, you will get Rs 40,750.
The interest rate is fixed at the end of the financial year
The first meeting of the Finance Investment and Audit Committee is held to decide the interest rate in PF. It gives an account of the money accumulated in this financial year. After this the CBT meeting takes place. After the decision of the CBT, the interest rate is applied after the concurrence of the Ministry of Finance. The interest rate is decided at the end of the financial year.