The government's move to raise the interest rates on General Provident Fund (GPF) will bring smiles to the face of millions of employees who contribute towards the scheme. The interest rates for GPF and similar funds would be 8.8%.

The rates for the last quarter of FY 11-12 were 8.6%, while the interest rates on contribution for April-November 2011 were 8.0%.

"It is announced ... that during the year 2012-13, accumulations at the credit of subscribers to the General Provident Fund and other similar funds shall carry interest at the rate of 8.8 per cent per annum," announced Finance Ministry.

Apart from GPF, the other contributory services which benefit from the scheme would be Contributory Provident Fund (India), State Railway Provident Fund, All India Provident Fund, and GPF (Defence Services).

Few other funds which benefit from the scheme would be Indian Ordinance Factories Workmen's Provident Fund, Armed Forces Personnel Provident Fund, Indian Naval Dockyard Workmen's Provident Fund, Indian Ordinance Department Provident Fund, and Defence Services Officer's Provident Fund.

The rate of interest on GPF and similar provident funds is calculated on returns on similar term/maturity government securities like bonds, t-bills.