Union Budget: 5 crore salaried persons to bear the brunt of EPF cut

MUMBAI: The unkindest cut in the Union Budget 2012 has gone almost unnoticed owing to its crucially timed revelation . No less than 4.72 crore salaried persons will be hurt by the Centre’s decision to reduce employee provident fund (EPF) interest rates from 9.5% to 8.25%. The move was announced on the eve of Budget 2012, and got camouflaged as India awaited big policy announcements .
Experts say that after the drastic reduction in EPF, a taxfree investment,the Centre may bring down public provident fund (PPF) and other interest rates to match these levels.
“The government is sending out mixed signals. It is encouraging people to invest in such schemes, but has lowered interest rates, which will deter employees from investing in them,” says Gautam Chainani, chief people officer of Aditya Birla Financial Services.
Financial planner Gaurav Mashruwala said, “It is inconceivable to have an 8.25% interest rate for EPF but 8.6% for PPF. EPF is mandatory for employees and is deducted from the salary, while PPF is optional.
Full Coverage on Budget 2012: Budget 2012, Budget News 2012