Understanding EPF And Its Significance
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EPF (Employee Provident Fund) is one such tax-free investment scheme, as the employee can deduct payments to the EPF as a tax deduction but will not have to pay any tax on interest withdrawals from the fund. Employee provident fund Organisation (EPFO) is a government entity under the Labour and Employment Ministry that requires any company with more than 20 permanent employees to make recurrent contributions to EPFO. This money is subsequently divided among three trusts: the Employees' Provident Fund Scheme (EPF) (1952), the Employees' Deposit Linked Insurance Scheme (EDLI) (1976), and the Employees' Pension Scheme (EPS).
Meaning And Significance Of Employee Provident Fund
The following is an explanation of what EPF is and why it is important
1. Employee Pension Scheme
The scheme provides economic safety during the post retirement life under the following scheme employees 8.33 % of the wages every month from employer’s contribution along with government’s 1.16% .
Which lists to benefit such as
- Pension post retirement
- Pension post disablement during the job term.
- Pension for family upon death
- Spouse pension
- Children pension
2. Employee’s deposit linked insurance scheme (EDLIS)
The following plan is a social welfare programme that provides security and relief to family members of dead employees. The government has made a significant stride in ensuring that the employee's family is cared for even after their death. The scheme provides Rs 6 lakh in sum assured benefits. .
Benefits of EPF
The following are the benefits of EPF:
1. Backed By The Government
Secure Returns safest investment schemes as it is backed and imposed by the government , it’s a brilliant saving scheme unlike any other existing .EPFO offers a high rate of interest against the Balance of Provident fund which could be as high as 8.6% for the fiscal year.
Monthly recurring contributions made to the PF are tax deductible under section 80 C of the income Tax Act; moreover the returns at the time of maturity or withdrawal are exempted from any tax.
2. Easy Loan Process
Loan against PF A beneficiary of the PF account can take out a loan against the balance of their fund , the interest rate is as low as 1% for a financial emergency and can be paid within 3 years.
Easy access to check in on the account EPFO gives you an Universal Account Number (UAN) which gives a smooth access to the employees to their PF fund through easy platforms such as UMANG app, Missed call, Through SMS .
Aid during Unemployment if a person unfortunately faces unemployment they would have their PF savings to fall back on they can withdraw 75% of their funds within the initial period of unemployment and the rest after a few months.
Conclusion
EPF is a welfare saving system that provides a health retirement bonus to dedicated employees. During one's working career, they may go through numerous phases and jobs, but they will always have the security of EPF to fall back on. This is a multi-faceted system that, in addition to providing maturity benefits, also provides insurance and is a pension scheme that, in addition to looking after the individual, also looks after their families after they die away. Finally, it is a caring plan that looks after people and their families while they are not working, and it is endorsed and enforced by the Indian government.
Also read - Short Term Investment Options In India
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.
