EPF Interest Rates Reduced for FY 2019-20
Recently, the government has introduced several reforms with regard to EPFO and ESI registration of Indian employers. With a view to bringing all the new public, private limited companies, as well as the one-person company under the ambit of EPFO & ESIC, the Ministry of Corporate Affairs has recently introduced a compact e-form SPICe+.
Through the e-form SPICe+, the ESI, as well as the EPF registration of the newly formed companies, shall now be done on the MCA-21 portal instead of the Shram Suvidha Portal of the Labour Ministry.
Henceforth, the EPF Registration and ESIC registration shall become mandatory for all the new companies that are to be incorporated with e-form SPICe+ with effect from 23rd February 2020.
Apart from that, the government has announced an amendment in the labour laws. The interest rates on the Provident Fund (PF) deposits for FY 2019-20 have been slashed to 8.5% from 8.65%, as reported by the Union Labour Minister Sh. Santosh Kumar Gangwar.
1. What is the new interest rates on the PF deposits?
The Central Board of Trustees of Employees Provident Fund Organisation (EPFO) has recommended that the interest rate on the PF deposits shall be 8.5%. Earlier, the interest rates on the PF deposits was 8.65% for the FY 2018-19.
This is the lowest interest rate on the PF deposits over the past 5 years, and this is not favourable for the 6 crore subscribers covered under the EPFO.
2. Why have the interest rates on the EPF deposits been reduced?
There are several reasons behind the sharp reduction in interest rates on the PF deposits, as indicated by the Labour Ministry.
The government over the past few months was seeking to align the EPF deposit interest rates with the other small saving schemes of the government like the Public Provident Fund (PPF) and the post office saving schemes.
The interest rates have been slashed partly because as per the EPFO, the investment of general public in EPF scheme has been quite low in the past few months.
3. How will the reduced EPF interest rate impact the people?
No doubt, the reduced EPF interest rate is a piece of bad news for above 6 crores EPF subscribers.
This is because generally, the working class depends a lot on their savings and the financial assistance schemes like Employees Provident Fund.
The most important benefit of the EPF is that it covers the financial risks of the employees and their dependents that may occur due to retirement, illness or any other contingency that involves the requirement of funds.
A reduction in EPF interest rates would mean less money into the hands of the general public, which is not favourable for them.
4. How can the corporate sector help their employees?
The corporate sector can play its responsive role by obtaining the mandatory EPF registration for all its employees. Now the government has made it mandatory for all the new companies to file the compact e-form SPICe+, so as to obtain the compulsory EPF Registration as well as ESIC registration.
We can help you easily file the e-form SPICe+, and obtain the EPF registration & ESIC registration.
If you want any sort of guidance regarding the process of filing the e-Form SPICe+, you can feel free to contact our business advisor at 8881-069-069.
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