NEW DELHI: The Union government on Monday notified 8.15% as the interest rate on deposits under the Employees’ Provident Fund scheme for 2022-23, as recommended by the retirement fund body’s Central Board of Trustees (CBT) in March this year.
On Monday, EPFO also directed its field offices to credit the interest into the accounts of over 6 crore active members as of March 2023. Interest rate on PF accounts declared in March this year was marginally higher than the four-decade low of 8.1% declared by the government in 2021-22. This was the lowest since 1977-78, when the EPF interest rate stood at 8%.
Stressing the need to impose a turn around time between the CBT’s recommendation and the finance ministry’s ratification of applicable interest rates for a financial year, finance experts pointed out that delays in notification of interest rates burdened the employers with having to process multiple payouts.
As per law, employers must disburse PF interest on a monthly basis as per the last declared rate on EPF, until the government notifies the latest applicable rate. This means that employers would have had to credit an interest of 8.1% to EPF subscribers for 2022-23, in keeping with the last declared interest rate on EPF for 2021-22.The task of crediting interest to subscriber accounts for 2021-22 was also considerably delayed and was only completed around May this year.
With the government notifying the new, increased EPFO rate of 8.15% for 2022-23, employers are now required to credit the additional amount of 0.05% to all subscribers.
EPFO’s March 2007 notification, which amended the ‘Interest’ provisions of the scheme, also said that if the rate declared for the current year happens to be less than the previous year’s declared rate, then the additional interest credit paid out to employees would accrue as bonus to them and cannot be taken back by employers.