The Finance Ministry on Wednesday said that there is no loss of interest rate for subscribers of Employees’ Provident Fund Organisation (EPFO) and the delay in crediting the same for FY22 is due to software upgrade being done to account for change in the tax incidence.
"For all outgoing subscribers seeking settlement and for subscribers seeking withdrawal, the payments are being done inclusive of the interest," the Finance Ministry said in a tweet.
EPF subscribers will get an interest rate of 8.1 percent for 2021-22 in their retirement savings accounts as announced by the government earlier.
The Finance Ministry has issued this clarification in response to a tweet from former Infosys Technologies’ director Mohandas Pai.
Here's the post by Pai (which he did mentioning a Moneycontrol story):
Earlier, in March this year the Employees' Provident Fund Organisation (EPFO) decided to lower the interest on provident fund deposits for 2021-22 to 8.1 percent from 8.5 percent provided in 2020-21. This is the lowest rate since 1977-78, when it stood at 8 percent.
EPF is one of the most beneficial savings options. Every year the government fixes interest on the amount deposited in this PF account.
A key question that most subscribers face here is how much they would earn from EPF on retirement.
While many assumptions are at play in this calculation, it’s imperative to understand that subscribers can earn a decent amount if they avoid withdrawing from their EPS corpus. The power of compounding further adds to the retirement savings over the long term.
In EPF, employees contribute 12 percent of their salaries, and employers contribute an equal amount, which doubles the monthly savings. The interest earned on the deposit is tax-free.
Going by the rule, the
interest here is calculated by adding the monthly running balance and multiplying it with the interest rate and dividing it by 1,200. The EPFO calculates the month-wise closing balance and then the interest for the whole year.
Now, if an employee withdraws a certain sum from the account, then interest from the beginning of the year till the last date of the month preceding the month in which the withdrawal took place is considered.
So, the closing balance for the year will be: Opening balance + contributions -withdrawal (if any) + interest.
Meanwhile, any employee who wants to
check their Provident Fund balance online can log in to the official website, send a text message ‘EPFOHO UAN ENG’ to 7738299899, give a missed call at 9966044425, or download and use the UMANG App.
Before checking the balance, one needs to keep the Universal Account Number (UAN) ready. The UAN links and helps a member or subscriber to view details of all Member IDs they have.
