Business Desk – EPFO New Rules Update: Employees’ Provident Fund Organization (EPFO) has tightened the rules for private and government companies that manage their own provident fund (PF) trusts. A new Standard Operating Procedure (SOP) was approved during the meeting of the Central Board of Trustees (CBT) chaired by Union Labor Minister Mansukh Mandaviya. The main objective of this step is to increase the earnings of about 32 lakh employees, which together amount to about Rs 3.50 lakh crore. To keep them safe and ensure that they get better benefits.
What are the new rules?
Under the new SOP, it will now be mandatory for over 1,250 private trusts operating across the country to ensure that the benefits they provide to their employees are either better than, or at least equal to, the benefits offered by the EPFO.
If a trust fails to comply with these rules, its ‘exempt status’ will be immediately cancelled. Deposits in inactive and non-KYC compliant accounts—including interest earned. Will have to be transferred to EPFO.
A ‘cap’ on interest rates
Private trusts will no longer be allowed to offer arbitrary interest rates to their members. According to the new rules, the interest rate offered by a trust cannot be more than 2% (200 basis points) from the rate declared by EPFO. This measure was implemented because some public sector undertakings (PSUs) were offering interest rates as high as 30–34% to their employees. A practice that was considered potentially risky to financial stability.
Digital Audit and Grievance Redressal
This new 133-page document focuses on reducing the burden of compliance and increasing transparency. Instead of mandatory annual physical inspections, a ‘risk-based’ digital audit system will now be implemented.
Only those trusts that are identified as ‘high-risk’ will be subjected to intensive scrutiny. Further, it will be mandatory for each private trust to set up its own online grievance redressal portal, which should be directly integrated with the system of EPFO. Employees will now be able to lodge their complaints directly online.
directly affected companies
As per EPFO records, big companies like Tata, Wipro and Reliance manage their own independent PF trusts. These include.
Private Sector: Tata Tea, Wipro, Infosys, Reliance Industries, Larsen & Toubro (L&T), TVS Motor and Raymond Ltd.
Public Sector (PSUs): Bokaro Steel, BHEL, Indian Oil (IOCL), ONGC and NTPC.
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