caalley logo

The alley for Indian Chartered Accountants

Wait for interest credit for 2021-22 prolongs for lakhs of EPF subscribers

New Delhi, February 2, 2023 

In October 2022, Finance Minister Nirmala Sitharaman had attributed the delay to a software upgrade and assured that credits will be visible soon

Nearly two years after the Budget 2021-22 introduced a tax on annual Employees’ Provident Fund (EPF) contributions of over ₹2.5 lakh, implementation challenges continue to affect lakhs of EPF members with interest dues for that year still not credited into their accounts.

The EPF rate for 2021-22 was declared at 8.1%, the lowest level since 1977-78, in March 2022 and was approved by the Finance Ministry in June. In October 2022, Finance Minister Nirmala Sitharaman had attributed the delay in EPF interest credits to a software upgrade and assured that the credits will be visible soon.

Since then, the Employees’ Provident Fund Organisation (EPFO) has split EPF passbooks for 2021-22 into taxable and non-taxable contributions, but the interest credit is still to be made to many EPF account holders.

“Annual accounts for the year 2021-22 have not been processed yet by the technical team in EPFO HO [Head Office]”, a Mumbai-based fintech firm’s employee Raghuttam Pai was informed by the retirement body’s grievance redressal team last Friday, in response to his queries about the missing interest.

All employees can opt for EPFO pension scheme: Supreme Court

“For a brief period, the EPFO’s website as well as app was down for some upgrade and I thought after that, the interest will show up,” Mr. Pai told The Hindu. “It is amazing that we are yet to get last year’s interest even as this financial year is coming to an end. Citizens are required to pay penal charges when tax returns or PF contributions are delayed, but nobody is held accountable when the government delays our dues,” he rued.

“I understand that the EPF passbooks for 2021-22 are now reflecting taxable and non-taxable contributions of employees in separate columns, so there has been some change to the software. But obviously the final interest credit for 2021-22 is still facing some challenge causing delays,” Saraswathi Kasturirangan, partner at Deloitte India, told The Hindu.

No response to queries

Detailed queries on the issue mailed this Monday to Central PF Commissioner Neelam Shami Rao did not elicit a response till the time of going to press.

Members of the Central Board of Trustees (CBT) that oversees EPFO, are not amused. “The interest was declared several months back, and we have almost come to the end of the next financial year. I would urge the officials of the EPFO to make sure every single member gets their interest credited immediately, even if it means working overtime. Treat it as if it is your own outstanding,” said K.E. Raghunathan, a CBT member.

Michael Dias, a board member, termed the delay in crediting interest ‘a serious matter’ that clearly reflects inefficiency on EPFO’s part.

“A miniscule number of EPF accounts involve contributions of over ₹2.5 lakh a year and even if you have had to split those contributions into two accounts, calculating and crediting the interest shouldn’t take so long in today’s day and age with all records online. The EPFO has a significant budget for technical upgradation and must pull up its bootstraps to correct the situation,” he said.

The EPFO Board chaired by Union Labour and Employment Minister Bhupendra Yadav is expected to meet by March to finalise the EPF rate to be paid to members for 2022-23.

Board members are likely to flag this unprecedented delay and pointed out that the EPF interest for 2020-21 had been credited to members’ accounts by December 2021. Ms. Kasturirangan noted that for members seeking withdrawal of their EPF savings, the balances are being paid out along with ‘up to date’ interest credit.

[The Hindu]

Don't miss an update!
Subscribe to our newsletter