GPF Interest Rate: The Department of Pension and Pensioners Welfare has provided clarity on the interest payment rules concerning government employees contributing over Rs 5 lakh to the General Provident Fund (GPF) during the fiscal year 2022-2023.
What is GPF?
The General Provident Fund (GPF) is a savings scheme akin to the Public Provident Fund (PPF), tailored for Indian government employees. It allows them to allocate a portion of their salaries to their GPF accounts. Upon retirement, employees receive the accumulated corpus from their GPF accounts, reflecting their service tenure contributions.
GPF interest rate
For the fiscal year 2023-24, the GPF interest rate stands at 7.1%.
Govt clarifies on GPF interest payment
Addressing the issue of interest payment on contributions exceeding Rs 5 lakh, an office memorandum issued on May 2, 2024, stated that interest on the excess amount may be paid, subject to applicable income tax. This decision follows a review and consultation with the Ministry of Finance.
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According to the Office Memorandum, “References have been received in this department for payment of interest on the amount exceeding Rs.5.00 lakhs deducted towards GPF subject to deduction of Income tax for the year 2022-23. The matter for payment of interest on excess amount of Rs. 5.00 lakh towards GPF subscription has been reviewed again in consultation with Ministry of Finance and it has been decided that where the amount of total subscription towards GPF in the year 2022-23 in respect of espect of a Government servant exceeds Rs. 5.00, the interest on the excess subscription may be paid, subject to applicable income tax.”
The memorandum emphasizes adherence to the General Provident Fund (Central Services) Rules, 1960, which stipulate that the subscription to GPF should not be less than 6% of the subscriber’s emoluments and should not exceed the total emoluments.
Furthermore, it reiterates the continuity of interest rates on GPF and linked funds for the current quarter of 2024.
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The clarified rules apply to various funds, including:
- The General Provident Fund (Central Services).
- The Contributory Provident Fund (India).
- The All India Services Provident Fund.
- The State Railway Provident Fund.
- The General Provident Fund (Defence Services).
- The Indian Ordnance Department Provident Fund.
- The Indian Ordnance Factories Workmen’s Provident Fund.
- The Indian Naval Dockyard Workmen’s Provident Fund.
- The Defence Services Officers Provident Fund.
This clarification provides assurance and transparency regarding interest payments for high-contributing government employees, ensuring compliance with applicable regulations and income tax considerations
