Retirement fund body EPFO has decided to provide 8.65% interest on EPF deposits for 2018-19 against 8.55% in the last year to its six crore subscribers, in what reinforced the tax-free instrument’s status as small savings option that yields the highest returns. The rate hike is the first since FY16.
While Sukanya Samriddhi (for girl child) and the public provident fund (PPF), both tax-free, follow the EPF in terms of returns, offering 8.5% and 8% respectively, others including bank term deposits offer significantly lower post-tax returns.
Although the National Pension Scheme, which is also completely tax-free now, offers in some cases returns up to 9%, the scheme’s returns are generally much lower.
All members of the Central Board of Trustees (CBT) of EPFO at a meeting here agreed to give a higher interest for subscribers for the current fiscal, labour minister Santosh Kumar Gangwar said.
Once approved by the CBT, the proposal requires the concurrence of the finance ministry. The interest rate is credited into the subscribers account after the finance ministry’s approval.
The EPFO had provided a five-year low rate of interest of 8.55% to its subscribers for 2017-18. The body had kept the interest rate at 8.65% in 2016-17 and 8.8% in 2015-16. It provided 8.75% interest for 2013-14 as well as 2014-15. The rate of interest was 8.5% in 2012-13.