With subscribers of the Employees’ Provident Fund Organisation have been worried over the crediting of interest in their accounts for the last fiscal, the Finance Ministry has assured there is no loss of interest and attributed the problem to a software upgrade.

“The interest is being credited in the accounts of all EPF subscribers. However, that is not visible in the statements in view of a software upgrade being implemented by EPFO to account for change in the tax incidence,” the Ministry said in a tweet late on October 5.

“For all outgoing subscribers seeking settlement and for subscribers seeking withdrawal, the payments are being done inclusive of the interest,” it further said.

The Ministry was responding to a tweet by TV Mohandas Pai, former CFO of Infosys Ltd.

Pai had earlier tweeted, “Dear EPFO, Where is my interest… need reforms. Why should citizens suffer because of bureaucratic inefficiency? Pl help.” He had also tagged Prime Minister Narendra Modi, Finance Minister Nirmala Sitharaman and several senior government officials in his tweet.

In response to the Finance Ministry’s tweet, Pai then asked why the interest credit is delayed every year. “EPFO accounts are fully electronic! Why cannot interest be credited within 30 days after year end?”

In another tweet, he further asked, “How is payment done to a subscriber retiring in May if interest is not credited for March end? Paid later?”

Pilot testing of the software:

The EPFO is understood to be testing the software and it is expected to become operative soon.

“Due to the new tax treatment, the e-passbook has to be split into two categories of less than Rs 2.5 lakh and over Rs 2.5 lakh so that tax can be deducted on contributions above Rs 2.5 lakh. The software is being pilot tested and it should be implemented by the month end,” said a person familiar with the development, adding that it is expected that this would enable the subscribers to view the interest credited to their accounts.

For the fiscal 2021-22, the EPFO has fixed the interest rate at 8.1 per cent, down from 8.5 per cent in the previous fiscal.

Many EPFO subscribers also took to Twitter to highlight the problem.

Experts said the EPFO shoud have clarified on the issue earlier but said there is no need for subscribers to panic.

KE Raghunathan, Member of the EPFO’s Central Board of Trustees, representing employers noted that this is a matter of great concern for members.

“If a person of the level of Mr Pai, whose life is not dependent on his EPFO savings or interest earning, can feel the pinch, then imagine the pain millions of EPFO subscribers would be feeling. The issue is not about the money, it is about knowing the status and details of the interest. Ofcourse the e passbook needs to be modified and needs software corrections,” he said. The EPFO could have clarified on this issue earlier itself and stated that the software upgrade needs to be tested thoroughly as it involves money and can not be done in a hurry and that the interest paid or credited will be visible soon and may have given a target date on this and also clarify, this will not affect their withdrawal or closure or any interest gained, he further said.

Kuldip Kumar, Partner, Vialto Partners India said members should not worry even if the interest is not visible in their individual accounts as the delay is due to PF authorities getting their software updated to implement the changes made in the taxation of PF interest such as withholding of tax on interest on employee’s contribution exceeding Rs 2.5 lakh.

“There will be no loss of interest as the entire interest as due for the past period will be duly credited as and when software is updated,” he said.

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