EPF Returns Better Than Bank Fixed Deposits

At a time when banks are cutting deposit rates, there is good news for more than 4.5 crore employees of public and private sector companies the Employees Provident Fund Organization (EPFO) will continue to pay 8.5% interest for 2009-10 on their provident fund corpus.

This is the fifth consecutive year that EPF will pay 8.5% return, ensuring that depositors derive maximum tax benefit. While the deposit is deducted from taxable income under section 80C, the interest accrued during the period is also completely taxfree. Therefore, the effective return from the instrument is as high as 13.1%.
The decision to retain EPF return at 8.5% was taken under the chairmanship of labour minister Mallikarjun Kharge and will be sent to finance ministry for ratification.

Sources said since the expected earnings from the EPF corpus of Rs 1.82 lakh crore during 2009-10 will cover the return of 8.5%, the decision should pass muster with the finance ministry. In fact, EPFO will be left with a surplus of Rs 6.4 crore during the period after paying a return of 8.5%.
Source: Times Of India

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