Finmin to soon ratify payment of 9.5% on PF deposits: Official

Written by: Pti
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New Delhi, Feb 15 (PTI) Finance Minister will soon givegreen signal to payment of 9.5 per cent interest rate onprovident fund deposits during 2010-11, a senior governmentofficial said today.

"..We can get ratification on 9.5 per cent for the fiscalfrom Finance Ministry any moment before March 31, 2011",Labour Secretary P C Chaturvedi said.

He was speaking to reporters ahead of the meeting of theCentral Board of Trustees (CBT), the highest policy makingbody of the Employees'' Provident Fund Organisation (EPFO).

Although CBT, which is headed by labour minister, haddecided to give a higher return of 9.5 per cent on providentfund deposits for 2010-11, the Finance Ministry had expressedits reservation on the move.

Downplaying the ongoing tussle between the twoministries over hiking the interest rates on PF deposits,Chaturvedi said, "these are just consultations between the twoministries".

The views of the Finance Ministry over the payment ofinterest rates will be placed before the CBT, he said,pointing out that decision of the trustees had always beenaccepted by the government in the past.

In case the row remains unresolved, EPFO sources said,the issue would be taken up by the two Ministries informallywith Prime Minister Manmohan Singh.

Following discovery of Rs 1,731.57 crore in suspenseaccount, the CBT raised rate of interest on provident funddeposits to 9.5 per cent for its 4.71 crore subscribers from8.5 per cent which is being paid by EPFO since 2005-06.

The decision, however, did not find favour with theFinance Ministry which argued that there was no real surplus.

It said the surplus shown by the EPFO arose because allsubscribers'' accounts were not updated.

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 Finance Ministry has to give concurrence to the rateof return decided by CBT and notify allowing tax exemption onentire such earnings on PF deposits.

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