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

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.

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.

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.

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.

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.