Good news for salaried employees: EPFO may hike PF interest rate for FY 2024-25

Good news for government and private employees. The Employees' Provident Fund Organisation (EPFO) board meeting scheduled for February 28 will discuss a potential Provident Fund (PF) interest rate hike for the 2024-25 fiscal year. The government is likely to make this decision to provide relief to the middle class.

Will PF interest rates increase?

The 2025 budget included several announcements and promises for the middle class, notably the tax exemption on annual income up to Rs 12 lakhs. Now, the government is expected to announce more good news for salaried middle-class individuals soon. It is anticipated that the government will increase PF interest rates.

Decision in EPFO board meeting

The central board of trustees of the Employees' Provident Fund Organisation (EPFO) will meet on February 28. It is expected that the meeting will discuss increasing the PF interest rate for the 2024-25 fiscal year. The Union Labor Minister will chair this meeting, which will also be attended by representatives of employers' associations and labor unions. The official agenda for the meeting has not yet been released.

Why is PF interest increasing?

The government is currently focused on reviving the economy, which requires increasing demand and consumption. After raising the income tax exemption limit, the government may now consider increasing the PF interest rate. This will provide higher returns on PF savings for middle-class employees, enabling them to increase other expenditures.

What is the current PF interest?

The government has been increasing interest rates for two consecutive years. Against this backdrop, PF account holders are hoping for another rate hike this time. In 2022-23, the government increased the PF interest rate to 8.15%. Subsequently, it was raised to 8.25% in 2023-24. The same interest rate has been applicable to PF since then, and the government is now likely to increase it further.

How much will EPFO interest rise?

Based on the current base rate of banks, a significant increase in PF interest rates is unlikely. Under these circumstances, the government may increase it by 0.10%, similar to the last time. Over seven crore people in the country have EPFO accounts, with new members joining continuously. The number of people depositing money in the EPFO retirement fund is also increasing.