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EPFO interest may be hiked to 9.5%

EPFO interest may be hiked to 9.5%
PTI
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First Published: Tue, Feb 15 2011. 05 10 PM IST
Updated: Tue, Feb 15 2011. 05 10 PM IST
New Delhi: About 4.71 crore EPFO subscribers are likely to get 1% increase in interest to 9.5% on their deposits for 2010-11 with labour minister Mallikarjun Kharge on Tuesday expressing hope the finance ministry will shortly give its concurrence to the proposal.
“I hope that after we answered all clarifications, they (finance ministry) will approve it (9.5% interest rate for 2010-11),” he said.
Kharge was speaking to reporters after a meeting of the Central Board of Trustees (CBT), the apex policy making body of the Employees’ Provident Fund Organisation (EPFO).
“As far as 9.5 per cent interest (2010-11) is concerned, the finance ministry had sought some clarifications. Those clarifications have been sent by labour secretary to the finance ministry,” he added.
Downplaying the ongoing tussle between the two ministries over hiking the interest rates on PF deposits, Kharge said, there was “no tussle between the two ministries over giving 9.5% interest rate”.
“These are just consultations between the two ministries. They had certain queries and when we satisfy them. They will definitely approve it,” labour secretary P.C. Chaturvedi later explained.
Although CBT, which is headed by labour minister, had decided to give a higher return of 9.5% on provident fund deposits for 2010-11, the finance ministry had expressed its opposition to the move.
Following discovery of Rs 1,731.57 crore in suspense account, the EPFO trustees favoured raising the rate of interest on provident fund deposits to 9.5% for its 4.71 crore subscribers from 8.5% which is being paid by EPFO since 2005-06.
The decision, however, did not find favour with the finance ministry which argued that there was no real surplus.
It said the surplus shown by the EPFO arose because all subscribers’ accounts were not updated.
In a recent letter of 29 January, the labour ministry argued the EPFO is not asking for any government support for the extra returns to the salaried workers. It is their money which has earned returns.
The finance ministry’s objections were based on a report by Comptroller and Auditor General which suggested that there was no surplus with the EFFO’s interest suspense account.
The finance ministry has to give concurrence to the rate of return decided by CBT and notify allowing tax exemption on the entire such earnings on PF deposits.
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First Published: Tue, Feb 15 2011. 05 10 PM IST