Interest Rate on Provident Fund
The statute of the employee’s provident fund is a scheme, which provides some security to the common people by the means of mandatory savings from their salary. This not only holds the money back for the benefit of the employees for the rainy days. But also gets in an equal amount of contribution from the employee towards the deposits made by the employees to the Employees provident fund.
Further more there are also tax benefits that are provided on the amount of deductions made from the salary of the person that is also beneficial to a common man, as the tax burden also gets reduced for him or her, while creating savings for the person and his or her immediate family members. Apart from that there is an interest that is also paid on these savings.
For the current fiscal year 2009 the rate of interest payable to the 4.4 crore members of the Employees provident fund scheme would be receiving an 8.5% rate of interest on the deposits. This is the third year in a row; when the trustees have decided to keep the rate of interest same as the previous year.
As per the officials of the EPF this decision of retaining the same level of interest as per the previous year at 8.5% would be virtually cleaning up the contingency account which the central board of trustees has been dipping in to, to provide a good rate of interest to the contributors to the Employees provident fund. This is a situation for the central board of trustees particularly in the years when there has been an election to be held in the country.
The decision of retaining the interest rate at 8.5% like the previous year came in at a time when the Reserve bank of India has announced a rate cut due to the economic recession all over.