On 12 March 2022, the Employees Provident Fund Organisation (EPFO) slashed the interest rate of the employees’ provident fund to a four-decade low for the year 2021-22 from the existing 8.5% to 8.1 %. This interest rate is only 1% higher than the last lowest interest rate of 8% declared in 1977-78.
It is interesting to note that EPFO subscribers enjoyed an interest rate of only 3% in 1952, which swelled to 7.5% by 1976-77. As India witnessed economic growth and prosperity, EPFO subscribers availed an interest return of more than 10% from the fiscal years 1985-86 to 2000-2001. The home run ended post-2001, when the EPFO slashed the rates below 9.5%. The lesser the interest earned by subscribers, the higher the impact on their accumulated retirement funds. It is a losing race for the common person against an average yearly inflation of around 7%-8%.
Since the last across-the-board tinkering of individual tax slabs in the Union Budget of 2012-13, there has been very minor relief for the middle class falling across three tax slabs. Minor adjustments were introduced in the Union Budget of 2017-18, when the existing rate of taxation for individual assesses with income between Rs 2.5 lakh and Rs 5 lakh was changed to 5% from 10%.
It’s been a decade since the diverse set of taxpayers have been given any major relief by successive governments. However, the government pleased the business community with attractive cuts in corporate tax.