In a recent move, the Employees Provident Fund Organization has made the latest disclosure that it is all set to fix the interest rate at 8.15% for the upcoming financial year, 2022-23. The rate of interest is basically changed every year. However, this time, the organization has decided to benefit the employees with a higher interest rate. The existing interest rate has been revised by 0.05% from the previous financial year.
The Central Board of Direct Taxation has advised the revisions in light of increasing inflation. A higher interest would deter the employees from withdrawing their pooled funds from the accounts over all these years. Therefore, this would increase the availability of funds to the government overall.
The interest rate has not yet come into effect for the time being. The Finance Ministry will notify it. Once the Ministry has notified it, it will start reflected in the bank account of all the individuals. The interest will apply not only to the provident fund accounts but at the same time will also apply on Voluntary Provident Fund accounts. The main intention behind the increment of the interest rate is to increase the saving of the people and, at the same time, minimize their risk by pooling their funds in government securities. The government has emphasized increasing the safety of the investment and providing assured growth to all the investors so far.
Employees Provident fund organization is the most strategic organization working towards the investors’ assured income growth. It strives to ensure a safer return amid the vitalities experienced by the equity and capital markets. The institution is conservative, and at the same time, it is unique in its approach. This organization’s policy has boosted the confidence of many investors all these years as they have been promised a stable return.
As per the present policy, every employee permits deducting a certain amount from their salary, which is deposited in the Provident fund account. An employer must deposit 12 percent of the deducted amount to the Provident fund account. The organization compounds the amount deposited and adds a certain interest amount which would now be calculated at 8.15%. The employer may also agree to deduct a certain percentage of his income, let it be 12%. The employer, in such a case, has to contribute not only to the Provident fund but also at the same time towards the employees’ pension scheme.
