Labour Minister Santosh Gangwar on Tuesday said over 6 crore EPFO members will get 8.65 percent interest on their deposits for 2018-19.
This is the first hike in interest rates for EPF subscribers in three years and comes at a time when interest rates across the financial system are falling. Employees’ Provident Fund (EPF) is a significant and one of the most widely used tools by the Indian workforce for their retirement planning.
Earlier, the government had reduced interest rate on small savings schemes for the September quarter. Here’s a look at how the 8.65% rate of return on EPF account compares with the returns on other small savings schemes and deposits:
— The Public Provident Fund (PPF) currently fetches an annual interest rate of 7.9%. It has a term of 15 years, which can be extended indefinitely in blocks of 5 years. The interest on the PPF is tax-free and contributions to the PPF are tax-deductible up to Rs 1.5 lakh per annum under Section 80C of the Income Tax Act, 1961.
— The Kisan Vikas Patra (KVP) yields 7.6% interest compounded annually with maturity of 113 months. The minimum amount for investing in this scheme is Rs 1,000 with no upper limit. This scheme offers no tax rebate on either contributions or interest earned.
— The National Savings Certificate offers 7.9% interest rate compounded annually but payable only at maturity. It can be purchased from any post office. The minimum investment is Rs 100 with no maximum limit. The tenure for this certificate is five years.
— The girl child savings scheme Sukanya Samriddhi Account fetches 8.4%. The minimum annual investment is Rs 1,000 and the maximum is Rs 1.5 lakh. The account can be opened by a parent or legal guardian for a girl child. The account matures 21 years after opening or on marriage of the girl child after she reaches the age of 18.
— Post office term deposits of 1-3 years fetch interest rate of 6.9%, to be paid quarterly, while the interest on five-year deposits is 7.7%.
— Interest rate for the five-year Senior Citizens Savings Scheme attract an interest rate of 8.6%. The scheme is open to individuals above the age of 60. The minimum investment is Rs 1,000 and maximum is Rs 15 lakh. The tenure is five years and can be extended for another three years.
— Besides savings schemes, interest rate on savings deposits stand at 4% annually. While interest rates on fixed deposits at banks can vary in the range of 6-8.5% depending on the bank, tenure, amount and senior citizen advantage.
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