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June 4, 2022

Government notifies 8.1% EPF for 2021-22

by CA Shivam Jaiswal in Circular and Notifications

Government notifies 8.1% EPF for 2021-22

For roughly five crore subscribers of retirement fund organization EPFO, the government has approved an 8.1 percent rate of interest on employees’ provident fund (EPF) deposits for 2021-22, which is a four-decade low.

The Employees’ Provident Fund Organisation (EPFO) decided in March this year to reduce the interest rate on provident fund deposits for 2021-22 to 8.1 percent, down from 8.5 percent in 2020-21. The proposal had been referred to the Ministry of Finance for approval by the Labor Ministry. Following the government’s approval of the interest rate, the EPFO will begin crediting the fixed rate of interest for the fiscal year to EPF accounts.

The current EPF interest rate of 8.1 percent is the lowest since 1977-78, when it was 8%. In March 2021, the Central Board of Trustees (CBT) settled on an interest rate of 8.5 percent on EPF deposits for 2020-21. The finance ministry ratified it in October 2021. Following that, the EPFO directed field offices to credit interest income of 8.5 percent to subscribers’ accounts for 2020-21.

The EPFO cut the interest rate on provident fund deposits to 8.5 percent for 2019-20, down from 8.65 percent in 2018-19, in March 2020. The interest rate on the EPF for 2019-20 was the lowest since 2012-13, when it was reduced to 8.5 percent. EPFO offered its subscribers an interest rate of 8.65 percent in 2016-17 and 8.55 percent in 2017-18. In 2015-16, the interest rate was slightly higher, at 8.8%. It offered an interest rate of 8.75 percent in 2013-14 and 2014-15, up from 8.5 percent in 2012-13. In 2011-12, the interest rate was 8.25 percent.

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