PF interest rate increased again – Finance Minister Mr. Arun Jetly had to step back under protest

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Arun Jaitely
Arun Jaitely

The government of India has decided that savings of employees  accumulated in provident funds will draw an interest rate of 8.8 per cent for the year 2015-16, higher than what it was originally declared just a days ago.

PM Mr.Modi,Finance Minister and his team was under fire from the protests by labour unions and the opposition over the government deciding on a rate of 8.7 per cent, ignoring the recommendations of a committee that monitors the massive savings scheme.

Before this roll back, the government was forced back step on the issue of controversial proposals to tax the withdrawals from EPF (Employee Provident Fund), and to raise the age limit to 58 for an employee to be able to pull out what an employer had deposited in his or her account.  Both measures were seen as unfair to millions of salaried workers and provoked outrage among the middle class and labour unions across all party line.

Any private organization with more than 20 employees on payroll has to participate in the scheme run by Employees’ Provident Fund Organization.  A predefined percentage of the employees’ salary is kept aside in an secure account and which accrues interest.  Employers have to make a matching contribution to each employees account.

The interest rate is revised by the government every year mostly during budget.