The finance ministry reversed its decision and agreed to the Employees Provident Fund Organisation (EPFO) paying 8.8% interest to over five crore subscribers during 2015-16.
The rethink came amid strong protests from trade unions which insisted that the 8.8% rate recommended by the EPFO's central board of trustees should be accepted. Last week, the finance ministry had insisted on offering 8.7%, the first time it was going against the recommendation.
The ministry had argued that a lower payout would help EPFO have sufficient reserves to meet higher interest outgo on inoperative accounts during the current fiscal. But following consultations with the labour ministry on Thursday and Friday , the finance ministry opted to go with the EPFO board's decision.
This is the Centre's third U-turn on EPF in the last two months. In early March, it was forced to withdraw the Budget proposal to tax the maturity corpus unless a part of it was used to invest in annuities.
The rethink came amid strong protests from trade unions which insisted that the 8.8% rate recommended by the EPFO's central board of trustees should be accepted. Last week, the finance ministry had insisted on offering 8.7%, the first time it was going against the recommendation.
The ministry had argued that a lower payout would help EPFO have sufficient reserves to meet higher interest outgo on inoperative accounts during the current fiscal. But following consultations with the labour ministry on Thursday and Friday , the finance ministry opted to go with the EPFO board's decision.
This is the Centre's third U-turn on EPF in the last two months. In early March, it was forced to withdraw the Budget proposal to tax the maturity corpus unless a part of it was used to invest in annuities.
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