The government has increased the interest rate on deposits in PF account by 0.05% from 8.10% to 8.15% for the financial year 2022-23. Employees Provident Fund Organization (EPFO) issued its office order on Tuesday. Let’s know about it in detail.
For the financial year 2021-22, the government had reduced the interest rate on PF to 8.10%, which was the lowest level in 43 years. About 6 crore employees of the country come under the ambit of PF.
Understand here how much more interest will be available on PF now
Under the EPFO Act, 12% of the basic salary plus DA of the employee goes to the PF account. So at the same time, the company also contributes 12% of the employee’s basic salary plus DA. Out of the 12% contribution of the company, 3.67% goes to the PF account and the remaining 8.33% goes to the pension scheme. All the money of the same employee’s contribution goes to the PF account.
In such a situation, suppose that till March 31, 2023 (opening balance for the financial year 2023-24), a total of Rs 5 lakh is deposited in your PF account. In such a situation, if you get interest at the rate of 8.10%, then you get 40,500 rupees as interest on 5 lakhs. But now after increasing the interest rate to 8.15%, you will get an interest of Rs 40,750.
Started in 1952 with 3% interest
In 1952, the interest rate on PF was only 3%. However, after that it kept increasing. For the first time in 1972, it reached above 6%. In 1984, it reached above 10% for the first time. The best time for PF holders was from 1989 to 1999.
During this, 12% interest was available on PF. After this the interest rate started declining. Interest rates have never been close to 10% since 1999. It has remained below 9.50% since 2001. It has been 8.50% or less for the last seven years.
The interest rate is decided at the end of the financial year.
The first meeting of the Finance Investment and Audit Committee is held to decide the interest rate in PF. It gives an account of the money accumulated in this financial year. After this the CBT meeting takes place. After the decision of the CBT, the interest rate is applied after the concurrence of the Ministry of Finance. The interest rate is decided at the end of the financial year.