Knowledge Portal

22/01/2013
Plea to raise EPF ceiling must be ‘seriously considered’
The Government has been receiving requests to hike the EPF ceiling which have to be “seriously considered,” Union Minister of State for Labour and Employment Kodikunnil Suresh said today.“The EPF ceiling is Rs 6,500. While salary has increased, this ceiling has remained same and therefore many employers are not contributing towards EPF,” Suresh told reporters after a review meeting with TN government officials

20/12/2012
CBT to fix EPF rate on Jan 15
The Central Board of Trustees, chaired by labour minister Mallikarjun Kharge, will meet on January 15 to decide on the interest component for employees’ provident fund for 2012-13. It could be higher than the 8.25% offered last year. The CBT’s executive committee will on January 14 take a call on EPFO's financial position to offer a better rate than last year, sources told FE. A senior EPFO official told FE that the rate for 2012-13 could be at least 8.5% but won’t go beyond 9% despite pressure from various stakeholders, especially trade unions, to bring the rate closer to the PPF rate of 8.8% or bank fd rate of 9.5-10%. In March, the finance ministry’s decision to pare the EPF rate to 8.25% for 2011-12 after CBT’s proposal of 8.6% and previous year’s rate of 9.5% invited protest from many corners.

13/09/2012
Permanent PF a/c number by 2013
Come March 2013, salaried employees will be able to switch jobs, without worrying about withdrawing or transferring their savings with the Employees Provident Fund Organisation (EPFO). As the EPFO migrates from a decentralised to a centralised system, it intends to give permanent account numbers to their holders. Currently, salaried employees need to open new EPF accounts whenever they change jobs. The old PF numbers are either closed, or the money in it withdrawn or transferred into new accounts. It turns more complicated when the employee moves from one state to another for a job. To put an end to this difficulty, the EPFO intends to shift to a permanent account number, akin to a mobile number, to make this possible.

03/08/2012
EPFO seeks greater flexibility to park fund in private sector companies
Retirement fund body EPFO managing huge corpus of over Rs 3.5 lakh crore has sought greater flexibility in investing larger amounts in private sector companies and Non-Banking Finance Companies (NBFCs). As per the proposal which would come before the EPFO's apex decision making body the Central Board of Trustees' (CBT) next week, the retirement fund also wants to invest in instruments having tenure of 15 years as against 10 years currently. The Employees' Provident Fund Organisation (EPFO) is seeking greater flexibility to park its funds in private sector debt instruments as it has already exhausted the investment limits. Under the existing eligibility criteria, EPFO can park funds in only seven entities which include three banks (HDFC Bank, ICICI Bank and Axis Bank) and four Non-banking Finance Companies (NBFCs) (HDFC Ltd, IDFC Ltd, LIC Housing Finance and IL&FS Ltd).

25/05/2012
PF savings set to earn higher interest
The stage is set for millions of private sector employees to get a higher interest rate in 2012-13 on their provident fund accumulations. This is because the Finance Ministry has increased the interest rate on its special deposit scheme (SDS) deposits, in which a large chunk of EPF monies are parked. The SDS interest rate has been revised upwards to 8.8 per cent for the current fiscal, from the existing 8.6 per cent. The EPF subscribers, numbering about 5 crore, got only 8.25 per cent interest for the financial year 2011-12. This was lower than the 9.5 per cent interest provided in 2010-11.The Centre's move to increase interest rate on SDS for 2012-13 would imply higher income for the employee provident fund organisation (EPFO).The Labour Minister, Mr Mallikarjun Kharge, had recently told the Rajya Sabha that the EPF interest for 2012-13 would be 8.6 per cent, but later retracted stating that his remarks were misconstrued. The interest rate on EPF would depend on the earnings from the EPF corpus, he later said.

15/05/2012
PF balance to be updated every month
Subscribers of the Employees’ Provident Fund Organisation (EPFO) will soon be able to check the balance of their provident fund (PF) accounts on a monthly basis.Once in place, the new system is expected to benefit around 60 million workers covered under EPFO.“The new system will be operational next month,” said RC Mishra, Central Provident Fund Commissioner. At present, subscribers can view their balances only on a yearly basis. “We are moving towards a system similar to that of banks, where the accounts are updated instantly,” added Mishra.Apart from improving the service for the subscribers, the main trigger for the change was the repeated instances where employers had deducted the PF payments from the salaries of their employees, but had not submitted the deductions to EPFO, Mishra said. “Now, it will be very difficult for the employers to hide the deductions from the employees’ accounts. Employees would know when the deductions have been made,” he added.

14/04/2012
Kharge writes to FM on I-T exemption to private PF subscribers
Labour Minister Mallikarjun Kharge has written to Finance Minister Pranab Mukherjee to consider extending the time-limit for private PF trusts to seek exemption from income tax on retirement benefits.About 46 lakh subscribers of such trusts face the threat of their retirement funds coming under tax net as Budget 2012-13 is silent on this."I would also request to consider extending time-limit expiring on March 31, 2012 for private PF Fund to get exemption for EPFO Act, to up to March 31, 2013 so that enough time is available to process the eligible cases by EPFO," Kharge said in his recent letter to Mukherjee.In 2006, then Finance Minister P Chidambaram had made it mandatory for all such PF trusts to seek exemption certificates from the Labour Ministry within a year for enjoying the tax benefits.Since all these trusts could not get the exemption certificates in that year, successive budgets have given annual waiver on request from the Labour Ministry.Out of 2,700 trusts, only 284 have so far been given the exemption certificates from the Labour Ministry while 400 applications are under process.Kharge has assured the Finance Ministry in his letter that the process of issuing exemption certificates to these trust would be expedited.

06/04/2012
EPFO may provide 8.6% interest rate for 2012-13
Faced with criticism for slashing interest rate on deposits by 1.25% for 2011-12, the retirement fund body EPFO may raise it to 8.6% for this fiscal to benefit about 5 crore subscribers. Last month, the Employees' Provident Fund Organisation (EPFO) had brought down the rate of interest to 8.25% for 2011-12 from 9.5% provided in 2010-11, evoking sharp criticism within and outside Parliament."EPFO is working on income estimates to provide 8.6% rate of return on provident fund deposits during this fiscal," a source privy to the development said. He further said the EPFO's apex decision making body, Central Board of Trustees (CBT), headed by the Labour Minister could meet next month to take a call on the issue.The source said EPFO can provide higher returns in the current fiscal as the government has increased interest rate on Special Deposit Scheme (SDS) 1975 to 8.6% from 8% with effect from December 1, 2011.The EPFO has parked about Rs 55,000 crore in the scheme which was launched by the Central government on July 1, 1975 to provide better returns to non-government provident funds and other such funds."EPFO was finding it difficult to maintain rate of return above 8.5% because of low interest rate on investment in SDS. But since that income would go up, it would be easier to provide interest rate over 8.5%," EPFO trustee D L Sachdev told PTI.

22/03/2012
Confusion for company-run provident fund trusts
Some of India's top companies, that manage in-house provident fund trusts, will have to get an 'exemption' licence from the Employees Provident Fund Organisation (EPFO), a unit of the labour ministry, to retain their tax benefits. Finance minister Pranab Mukherjee's predecessor P Chidambaram, in his 2006 Budget, had stipulated that privately-managed PF trusts would have to seek exemptions from the labour ministry in order to operate. Chidambaram had set a one-year deadline for this, but this has been extended every year, till now.

16/03/2012
Epfo cuts rate to 8.25%
After last year’s 9.5% interest rate bonanza, the 4.7-crore subscribers of Employees Provident Fund will have to settle for a lower rate this year. The government has decided to reduce the interest rate on the employees’ provident fund to 8.25% for the current fiscal, as advised by EPFO’s finance and investment committee.The finance ministry has approved the interest rate and the labour and employment ministry has directed the EPFO to take it forward.“Yes, the finance ministry has decided on 8.25% purely on the basis of EPFO's expected income and it is justified in that regard. We do not have any other option but to implement it. We have forwarded the directive to EPFO,” Mrutyunjay Sarangi, secretary, labour and employment told FE.

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