By IT Correspondent
New Delhi, December 14:
Employees’ Provident Fund Organisation (EPFO) is expected to credit 8.5 per cent rate of interest in the employees’ provident fund (EPF) of about six crore subscribers for 2019-2020 by this month end.
In March 2020, EPFO’s top decision-making body – the Central Board of Trustees (CBT) headed by Santosh Gangwar – had approved 8.5 per cent interest rate on the provident funds for 2019-20. However in the meeting of the trustees, headed by Labour Minister Santosh Gangwar in September 2020, the EPFO had planned to split the 8.5 per cent interest into two instalments – 8.15 per cent and 0.35 per cent.
Now the Union Labour Ministry has sent a proposal to the Union Finance Ministry for agreeing to credit 8.5 per cent rate of interest on EPF for 2019-20. The ratification of the Ministry of Finance is likely in a few days. As such it is expected that the interest will be credited fully by this month itself.
“It (8.5 per cent interest) would comprise 8.15 per cent from debt income and balance 0.35 per cent (capital gain) from the sale of ETFs (exchange traded funds) subject to their redemption by 31 December, 2020,” a statement by the Ministry of Labour said, explaining that this split was zeroed in on with CBT, which then recommended it to the Centre.
The CBT had also recommended accounting capital gains, such as those from sales of exchange traded funds (ETFs), as being exceptional cases for Fiscal Year 2020. As had been planned before, the EPFO will provide 8.15 per cent interest on EPFs right after the approval from the Finance Ministry. The remaining 0.35 per cent rate is to be provided by 31 December, after the proposed liquidation of ETFs.
The EPFO had planned to liquidate some of its investment in ETFs to enable the 8.5 per cent provision, but could not do so owing to choppy market conditions during the lockdown.
According to the source, it should not be hard to issue the entire 8.5 per cent in one go as benchmark indices are at an all-time high, indicating favourable market conditions.
