The curiosity levied on loans in opposition to PF stability is 1 per cent
The Employees’ Provident Fund (EPF) is without doubt one of the most generally used funding instruments by salaried individuals. The EPF, popularly often known as merely the PF, is a government-backed financial savings scheme for workers of the organised sector. Considered a post-retirement or social safety scheme, most institutions have to increase this facility to their workers. Employees and employers each contribute to the fund, which is dealt with by the federal government and, in the end, withdrawn by the person on her/his retirement. The particular person earns curiosity on the sum collected within the fund over a time frame.
Other advantages of opening a PF account are:
1. Loans
Individuals can take loans in opposition to the cash already collected of their PF accounts. The curiosity levied on loans in opposition to PF stability is 1 per cent, and the cash needs to be repaid inside three years of the date of mortgage disbursal.
2. Tax Benefits
The worker’s contribution in direction of the PF is eligible for tax exemption below Section 80C of the Income Tax Act. Additionally, the curiosity earned on the quantity deposited can be exempted from revenue tax. Some specialists say the account holder earns curiosity even when the PF account is mendacity dormant for greater than three years. EPF withdrawals aren’t taxable after 5 years of steady service.
3. Free Insurance
Under the Employees’ Deposit Linked Insurance (EDLI) scheme, a nominee or authorized inheritor of an lively EPFO member will get a lump sum fee of as much as Rs. 7 lakh in case of demise of the member in the course of the service interval. All organisations coated below EPF and Miscellaneous Provisions Act, 1952, get enrolled for EDLI routinely.
4. Pension
A PF account holder can be eligible for pension after 58 years of age, however the particular person has to contribute recurrently (month-to-month) to the PF account for no less than 15 years. While employers and workers each contribute 12 per cent of the wage to the EPF, 8.33 per cent of the employer’s share is diverted in direction of the Employees’ Pension Scheme (EPS).
5. Premature withdrawal
The EPFO permits members to partially withdraw after 5-10 years of service to fulfill particular wants together with medical, residence mortgage compensation, and unemployment.
