New Delhi, Feb 14 (PTI) Amid ongoing tussle between theministries of finance and labour over giving 9.5 per centinterest on PF deposits for 2010-11, the EPFO''s trustees aremeeting tomorrow and may seek PMO''s intervention into thematter.
Although the EPFO''s apex decision making body, theCentral Board of Trustees (CBT) headed by labour minister, haddecided to give a return of 9.5 per cent on provident funddeposits for 2010-11, the Finance Ministry had expressed itsopposition to the move.
"The Finance Ministry has not given concurrence to 9.5per cent interest rate for the current fiscal despite allexplanation made by the Labour Ministry. Therefore, we wouldsuggest seeking PMO''s intervention on the issue," CBT memberand Secretary All India Trade Union Congress D L Sachdev said.
The CBT had raised rate of interest to 9.5 per cent forits 4.71 crore subscribers from 8.5 per cent which had beenpaid by EPFO since 2005-06. The trustees decided to raiseinterest rate after a surplus of Rs 1,731.57 crore found inthe interest suspense account.
However, the Finance Ministry had questioned the increasein the rate of interest to 9.5 per cent, stating the EPFO hadno real surplus. It said the surplus shown by the EPFO arosebecause all subscribers'' accounts were not updated.
Refuting Finance Ministry''s claim, the Labour Ministryhas justified EPFO''s declaring 9.5 per cent interest for2010-11, saying the surplus of Rs 1,731.57 crore with EPFO isreal and not an accounting law.
The Finance Ministry has notified income tax exemptiononly up to 8.5 per cent interest, which EPFO has been givingsince 2005-06 on this rate of return.
In a recent letter of January 29, the Labour Ministryargued the EPFO is not asking for any government support forthe extra returns to the salaried workers. It is their moneywhich has earned returns.
The Finance Ministry''s objections were based on a reportby Comptroller and Auditor General which suggested that therewas no surplus with the EFFO''s interest suspense account.
The report argued that Rs 1,731 crore was shown as extraamount because of not updating 4.72 crore members'' accounts.
In its counter-argument, the Labour Ministry said thatthe EPFO has kept a provision for the extra payment ofinterest irrespective of whether accounts are updated or not.
The Finance Ministry has to give concurrence to the rateof return decided by CBT and notify allowing tax exemption onentire such earnings on PF deposits.
The other issues on agenda of tomorrow''s meeting includeinvesting a portion of EPFO funds in stock markets.
EPFO trustees have been so far turning down the proposalof the Finance Ministry to invest up to 15 per cent of itscorpus in equities. Besides, the Finance Ministry also wantsblocking of withdrawals from new accounts for three years toreduce number of claims.