In the wake of complaints by several subscribers on social media that they were not able to view the interest credit in their Employees’ Provident Fund (EPF) account, the Union Ministry of Finance has now issued a clarification on the matter.
It said in a Tweet that subscribers were not able to view the interest credit in their accounts because of a software upgrade on the back of changes in taxation laws on provident fund deposits.
It assuaged users that there was no loss of interest, and that the interest was being duly credited to their accounts. EPF subscribers will get a return of 8.1 per cent for FY 2021-22. For FY 2020-21, the Employees’ Provident Fund Organisation (EPFO) had approved an annual dividend of 8.5 per cent. Later in March 2022, the EPF rate for 2021-22 was slashed to 8.1 per cent, the lowest level since 1977-78.
“There is no loss of interest for any subscriber. The interest is being credited to the accounts of all EPF subscribers. However, that is not visible in the statements in view of a software upgrade being implemented by EPFO to account for change in the tax incidence,” The Finance Ministry said in the Tweet.
Previously, former Infosys director Mohandas Pai had tagged Prime Minister Narendra Modi and Union Minister of Finance Nirmala Sitharaman and others in a Tweet over the issue asking why common citizens should face problems because of bureaucratic hassles.
Following the Tweet, the Union Ministry of Finance issued the clarification.
The Ministry announced in another Tweet that for all outgoing subscribers and those seeking withdrawal, the payments are been done inclusive of interest.
“For all outgoing subscribers seeking settlement and for subscribers seeking withdrawal, the payments are being done inclusive of the interest,” The Union Ministry of Finance said in the Tweet.
Earlier in April this year, the EPFO had issued new guidelines pertaining to the deduction of tax on interest earned on EPF accounts where the contribution exceeds Rs 2.5 lakh in a financial year.
It announced in a circular that the interest earned on excess contributions would be subject to tax deduction at source (TDS ), effective from April 1, 2022. The tax would be deducted at the time of credit of interest in the EPF account. In case of a pending final settlement or transfer, the tax will be deducted at a later date during the final settlement.
Further, the TDS on interest earned on excess contribution above Rs 2.5 lakh would be applicable in case of final settlement, transfer claims, or, transfers from exempted organisations to EPFO and vice versa. They will also be applicable on transfer from one trust to another, past accumulation transfer, and at the time of annual account processing, i.e., credit of interest in EPF accounts.