Here are five benefits of an EPF account that you may not know
Every month your company deducts a part of your salary as a contribution towards the Employees’ Provident Fund (EPF) account.
Employees' Provident Fund (EPF), also simply called PF, if a fund collected by Employee Provident Fund Organisation (EPFO) - a statutory body established by the Employees' Provident Fund and Miscellaneous Provisions Act, 1952., comes in handy when there's an immediate requirement of fund or after you retire.
Only employees of companies registered under the EPF Act, can invest in the EPF or PF. The company and the employee contribute 12 percent of the the employee's basic salary and dearness allowance every month to the EPF account where the company's contribution is separate.
Here are five benefits of PF:
- This savings scheme offers tax exemption under Section 80C of the Income Tax Act.
- If a member of the EPFO has been contributing towards the fund in a regular way, then in the event of death, the family of the member can avail the benefit of Insurance Scheme 1976 (EDLI). This scheme entitles the member for an amount which is 20 times his last drawn monthly salary. It can be up to a maximum amount of Rs 6 lakh.
- This scheme offers a lifelong pension scheme under the Pension Scheme 1995 (EPS).
- The money which is deposited in your EPF accounts earns high returns for the members who have an account with the Employees’ Provident Fund Organisation (EPFO), which is a statutory body under the Employees’ Provident Fund Act, 1956. The EPF interest rate is declared every year by the EPFO. It is 8.5 percent for this financial year.
- The government has allowed partial withdrawal facility in the wake on pandemic and unemployment.