Govt increases EPF interest rate to 8.8 percent bowing to trade union pressure

FP Staff Apr 29, 2016 

The government was forced to take a U-turn on the Employee Provident Fund (EPF) issue yet again on Friday when it increased the rate to 8.8 per cent from 8.7 per cent decided earlier. The Central Board of Trustees (CBT) had originally recommended 8.8 per cent.

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The reversal came after trade unions threatened nationwide protests to press their demand. On Thursday, the labour minister, Bandaru Dattatreya, had said he will discuss the issue with Finance Minister Arun Jaitley.

"I am happy that finance ministry has agreed to 8.8 per cent for 2015-16," Dattatreya told reporters in Delhi on Friday.

This is the third time the government is forced to take back his decision on the EPF issue since February. First was when the government proposed in the 2016 Union Budget to tax 60 per cent of the EPF corpus, which it had to roll back almost immediately on account of mass protests.

Second was when the amendment on the age limit to withdraw the retirement corpus to 58 years from 54 earlier was brought in, only to roll back after trade unions protested.