PF claim settlement rule change: Now EPF members will get more interest money on EPF withdrawal, faster settlement The changes announced in the Employees Provident Fund Scheme will help EPF members to get more interest in claim settlement and faster claim settlement. Know all about the new rule, when it is applicable, and which EPF claims it will impact
The Employees Provident Fund Organisation (EPFO) has announced some relief to the Employees Provident Fund (EPF) members regarding interest payment on the EPF claim settlement. The decision was made during the Central Board of Trustees (CBT) meeting held on November 30, 204. The new EPFO rule will help EPF members to get more interest money at the time of EPF claim settlement and also faster claim settlement.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
What is the EPFO announcement on EPF claim settlement?
As per the announcement made by EPFO, "CBT approved a significant amendment to paragraph 60(2)(b) of the EPF Scheme, 1952. As per existing provisions, for the claim settled till 24th of the month, interest is paid only upto the end of the preceding month. Now, the interest will be paid to the member upto the date of settlement. This will result in financial benefit to the members and reduce the grievances."There was also a further delay in the claim settlement if it was not settled till 24th of the month. "Till now, interest-bearing claims are not processed between the 25th and the end of each month to avoid loss of interest to the members. After this decision, these claims will be processed for the entire month leading to reduced pendency, timely settlement and optimized utilization of resources. It reflects EPFO's commitment to efficient, transparent, and member-focused service delivery," said EPFO.
Also Read: EPFO extends last date to activate UAN for ELI Scheme
ET Wealth decodes how the new EPFO rule will help EPF members.
Web Development
Advanced Java Mastery: Object-Oriented Programming Techniques
By - Metla Sudha Sekhar, IT Specialist and Developer
Marketing
Digital Marketing Masterclass by Pam Moore
By - Pam Moore, Digital Transformation and Social Media Expert
Finance
Crypto & NFT Mastery: From Basics to Advanced
By - CA Raj K Agrawal, Chartered Accountant
Entrepreneurship
Building Your Winning Startup Team: Key Strategies for Success
By - Dr. Anu Khanchandani, Startup Coach with more than 25 years of experience
Entrepreneurship
Crafting a Powerful Startup Value Proposition
By - Dr. Anu Khanchandani, Startup Coach with more than 25 years of experience
Entrepreneurship
Marketing & Sales Strategies for Startups: From Concept to Conversion
By - Dr. Anu Khanchandani, Startup Coach with more than 25 years of experience
Artificial Intelligence(AI)
Basics of Generative AI: Unveiling Tomorrow's Innovations
By - Metla Sudha Sekhar, IT Specialist and Developer
Artificial Intelligence(AI)
Collaborative AI Foundations: Working Smarter with Machines
By - Prince Patni, Software Developer (BI, Data Science)
Entrepreneurship
Validating Your Startup Idea: Steps to Ensure Market Fit
By - Dr. Anu Khanchandani, Startup Coach with more than 25 years of experience
Web Development
C++ Fundamentals for Absolute Beginners
By - Metla Sudha Sekhar, IT Specialist and Developer
Artificial Intelligence(AI)
AI for Everyone: Understanding and Applying the Basics on Artificial Intelligence
By - Ritesh Vajariya, Generative AI Expert
Legal
Complete Guide to AI Governance and Compliance
By - Prince Patni, Software Developer (BI, Data Science)
Marketing
Modern Marketing Masterclass by Seth Godin
By - Seth Godin, Former dot com Business Executive and Best Selling Author
Web Development
12-Factor App Methodology: Principles and Guidelines
By - Prince Patni, Software Developer (BI, Data Science)
Web Development
Mastering Full Stack Development: From Frontend to Backend Excellence
By - Metla Sudha Sekhar, IT Specialist and Developer
Marketing
Performance Marketing for eCommerce Brands
By - Zafer Mukeri, Founder- Inara Marketers
Artificial Intelligence(AI)
Mastering C++ Fundamentals with Generative AI: A Hands-On
By - Metla Sudha Sekhar, IT Specialist and Developer
Web Development
Java 21 Essentials for Beginners: Build Strong Programming Foundations
By - Metla Sudha Sekhar, IT Specialist and Developer
Data Science
SQL Server Bootcamp 2024: Transform from Beginner to Pro
By - Metla Sudha Sekhar, IT Specialist and Developer
Artificial Intelligence(AI)
Master in Python Language Quickly Using the ChatGPT Open AI
By - Metla Sudha Sekhar, IT Specialist and Developer
Artificial Intelligence(AI)
AI and Analytics based Business Strategy
By - Tanusree De, Managing Director- Accenture Technology Lead, Trustworthy AI Center of Excellence: ATCI
Marketing
Digital Marketing Masterclass by Neil Patel
By - Neil Patel, Co-Founder and Author at Neil Patel Digital Digital Marketing Guru
What is the new rule on EPF claim settlement?
As per the new EPF claim settlement rule, the interest on the EPF balances will be made till the date the EPF claim is settled.Sandeep Agrawal, Director and Founder of Teamlease Regtech, says, "Under the previous rule, if a claim was settled till the 24th of the month, interest would only be paid until the end of the previous month, causing members to lose interest for the days between the start of the current month and the date of settlement. With this amendment to paragraph 60(2)(b) of the EPF Scheme, 1952, members will receive interest up to the actual settlement date. Further, under the old system, claims were not processed after the 25th and until the start of the following month to prevent members from losing interest, as interest was only paid up to the end of the preceding month. With the new rule, claims will be processed even after the 25th, with interest calculated up to the actual date of settlement, leading to reduced pendency and timely settlement."
Puneet Gupta, Tax Partner, EY India lists out the benefits EPF members will get due to the proposed changes to the EPF scheme-
1. Increased financial benefit: EPF Members will receive interest for the entire period until their claim is settled, resulting in higher returns.
2. Reduced grievances: By eliminating the gap in interest calculation, members are less likely to face issues related to interest loss.
3. Timely settlement: Claims can now be processed throughout the month, reducing delays and ensuring faster access to funds.
4. Optimized resource utilization: EPFO can process claims more efficiently, leading to better service delivery.
Also Read: Is exit date updation mandatory to apply for EPF balance transfer?
How much extra interest EPF members will get on EPF claim settlement?
EPF members will get interest till the date of EPF claim settlement as the claims can be processed throughout the month. Hence, the question arises: how much extra interest will an EPF member get at the time of settlement?Gupta explains this with an example. Let's assume an EPF member has a balance of Rs 10 lakh, and the annual interest rate is 8.25%. If the claim is settled on the 20th of the month, previously, interest would be calculated only up to the end of the preceding month. Now, interest will be calculated up to the date of settlement.
Old calculation rules: Interest is calculated till the end of the preceding month
As the claim is settled on the 20th of the month, there will be no interest for the month in which the claim is settled. The EPF member will get the monthly interest for the preceding month. This will be calculated as follows:
Monthly interest on EPF balance = Rs 10 lakh X (8.25%/12) = Rs 6,875
New calculation rules: Interest is calculated till the EPF claim settlement date
The new EPF claim settlement rules allows EPF member to claim interest till the settlement date. The interest on EPF claim settlement will be calculated as follows:
Monthly interest = Rs 10 lakh * (8.25% / 12) = Rs 6,875
Interest for 20 days = (Rs 6,875 / 30) * 20 = Rs 4,583
Hence, under the new rules, an EPF member will receive an additional interest of Rs 4,583.
When will the new EPF claim settlement rule come into effect?
Gupta says, "It may be noted that official notification for amendment in Paragraph 60(2)(b) is not released as yet. The new rules for EPF claim settlement will come into effect once the notification is issued by the government. Till then the existing/old rules for EPF interest payment will apply."On which EPF claims the new rules are applicable?
Gupta from EY says, "The new proposed rule covers amendments in Para 60(2)(b) under the EPF Scheme, 1952. This covers the methodology for calculation of interest in case of claims for refund under Para 69 or Para 70 of the EPF Scheme, 1952. Thus, the new rule will apply to the specified EPF claim settlement only."As per the EPF Scheme, the claim settlement in Para 60(2)(b) happens in the following events:
Para 70 of EPF Scheme: Payment of accumulated EPF balance on death of EPF member to nominee/legal heirs
Para 69 of the EPF Scheme: Withdrawal of full EPF amount by EPF members in the following events -
a) Retirement from service after attaining the age of 55 years
b) Retirement due to disability
c) For taking employment abroad
d) Closure of EPF account after two months of unemployment.
Gupta says, "The new rule may not apply to EPF withdrawal made for other specified claims such as EPF claim for marriage, house building advance etc.However, clarity is awaited on the same."
#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
This story originally appeared on: India Times - Author:Faqs of Insurances
