About Employee’s Provident Fund and benefits of EPF
Provident Fund is nothing but saving towards retirement years for everyone. However, the financial planners do not advise you to grab attention on corpus before retirement. As per the Provident Fund terms and condition, 12% of an employee salary goes along with the fund matching contribution. Every year, EPFO announces particular interest rate which is paid on the accumulated time of fund corpus. The PF money can be withdrawn after two months from the employment time. The application can be filled with PF authorities who allow an employee to get PF after the retirement. The aim of the scheme is to promote the retirement savings for employees across India. Besides retirement, it is accumulated with an employee account which can be used for resignation or death one. It provides financial security plan that allows you to find rendered EPFO details forever.
Benefits of Provident Fund scheme
It is named as the big saving plan in India for many reasons during the retirement time. However, there are several benefits available to the employee who needs to grab attention on PF money while working. Some of them are listed below as follows.
The interest gained on the funds takes EPF account which consists of tax-free one. However, it provides tax-free as well as optimises growth on savings and considers the tax deductable income tax values forever.
It is not easy to withdraw, and so savings are ensured the right thing for providing real tax assurance for the employee.
The amount can be collected at the time of retirement and thus providing financial security at the right time.
The Provident Fund was also helpful at the time of emergencies to meet desired financial requirement for the employee. With the help of premature account, you are allowed to grab money in certain cases.
Loss of income
If the employee has the hard situation to lose his job, this PF will help them to overcome the financial crisis. It provides stable accounts that meet according to the income gap till another job can be found.
Source of funds
PF funds can provide employer to meet the desired funds on pressing needs for medical, housing, marriage and education.
Under the Act, the PF provides employee pension fund which helps them to use during the retirement period eventually. So, it allows them to grab attention on collecting PF funds that make you sustain for a long time.
Eligibility for PF membership
- While applying for PF, the employee has to become the member of the Provident Fund.
- However, the employees are eligible for membership on the day of joining establishment and include provident funds, insurance, and pension.
- It does not sound suitable for the State of Jammu and Kashmir
Things to know about Provident Fund
While applying for Provident Fund, the employee must know about certain things which let them get information regarding the PF scheme and act.
To encourage long-term saving, the government has formulated with tax laws according to the PF act. With the continuous employment, it attracts no tax liability and thus providing employment with different employee details. Moreover, the PF is maintained well with the old employer and transferred to the PF account of the new employer. It is named as continuous employment which is enough for terminated certain reasons while withdrawing the PF account.
For some cases, the withdrawal before five years must include the taxable account in the same financial year. Thus, the amount can be shown on the tax return for the next assessment year during the PF account valid for the employee.
If you claim benefits under Section 80C on your contribution, it will tax as salary for your pay. Hence, the interest earned on your contribution takes place by giving income from other sources and taxed according to the tax slabs.
Each and every employee contribute to getting interested, and PF earned during the one’s income and taxed according to the scheme valuable forever
If the withdrawal period limits for five years, the continuous employment takes value for TDS and any tax included by the time of service. It covers by 10% deducted that is capable of providing TDS for those whose income falls with the taxable limit. So, this is essential for the employee to undertake the right action on which the individual tax slabs denotes the PF account. You can also transfer the PF account via online and gained preference over offline transfers too.