EPF interest delays: How it impacts compounding and tax filing
Subscribe to enjoy similar stories. Chennai-based Sudarshan Jain was in for a shock when he checked his Employee Provident Fund (EPF) passbook in August this year. Interest on his EPF for the financial year 2023 and 2024 had not been credited.
The timeline coincided with his job change, so he was convinced that his account never got transferred from his previous to current employer. “I enquired with my company and they informed me that the account was transferred successfully. I ran helter skelter for one month trying to figure out whether my job change had impacted interest credit or if there was another reason.
On not getting a response from EPFO support, I went to their X (erstwhile Twitter) account to complain, only to find out there were several others like me," he said. Jain is right. Delay in EPF interest payment is a common concern for several subscribers.
This issue is not specific to any one financial year and, in fact, recurs year after year. Moreover, changing companies does not impact the interest payment since EPFO systems calculate the interest till date of claim settlement, said Vishwanath B G, associate director, Mercer Wealth India. Also read | No interest on National Savings Scheme from Oct 1: What it means for you A quick glance at EPFO’s X account shows the scale of the problem of delay in interest credit.
The concern for subscribers is that they may be losing the benefit of compounding on the delayed interest. To explain with an example, if the interest rate on a ₹1,000 deposit is 8%, ₹80 is credited to the account at the end of year, which makes the new principal ₹1080 on which interest is earned over the next year. The interest in the second year would be ₹86.4.
Read more on livemint.com
