Employee Provident Fund Organization (EPFO) falls under one of the organizations which go through the volume of economic activities amongst other Social Security Organisations. The organization was established in 1951 on 15th November to provide security to the salaried employees after retiring. They are constantly bringing new methods to provide enough benefits to the new and existing account holders. The retirement funds body recently developed a composite Form 11 that automatically transfers the provident funds whenever the job is changed. The composite Form 11 is filled by the employee for the employer for providing the details of the bank account, Aadhaar, and other personal details.
The employee and the employer both are to contribute at least 12% of their basic salary in the Employee Provident Fund (EPF). An employer’s 8.33% out of 12% is charged in Employee’s Pension Scheme (EPS), while an employee’s 12% is added in the Employee Provident Fund (EPF).
Below listed are the benefits of holding a PF Account.
1. Tax Exemption
The interest earned on the Employee Provident Fund account is tax-free. The amount if withdrawn prematurely before five years then taxes will be applicable, however, if withdrawn after maturity of the account, then the taxes are non-applicable. You can easily attain tax-free monthly charges under Section 80C. Your employer’s offerings in your Employee Provident Fund (EPF) are tax-free too.
2. Long-term Investment
The scheme provides the holder’s incentives to not withdraw the amount prematurely through additional economic security. These make it easy for the account holders to use the money in the future for any emergency.
3. Easily Accessible
As your Aadhaar Card is linked to Universal Account Number (UAN), it becomes easy to access the account even if they enter a new firm due to the availability of Form 13. The form automatically after submission is linked to your details of the account holder.
4. Pension Scheme
The employer’s 8.33% from 12% is charged to Provident Fund in the pension scheme. The method is also used in the pension plans.
5. Benefit on the Insurance
If there is no group life insurance benefit, then the employer is liable to contribute 0.5% of the monthly payment for the life insurance. For many, this will not be considered a big contribution; however, for some, it will result in the best during family emergencies.
6. Extra Benefits
Extra benefits that are provided other than the economic security and tax exemption, the account holder can use the account for the below-mentioned purposes:
- Medical Emergency- There is no limit to the contributions made for medical emergencies.
- Education/Marriage- 50% of the amount can be withdrawn after seven years of contribution in the account three times.
- Housing- For building a house or for buying a flat, you can withdraw the amount after three years of contribution. However, for the renovation of the house, you need to make the Provident Fund (PF) contribution for continuous five years.
- Death- The deceased account holder’s full amount will be given to the beneficiary assigned by the account holder.
The Most secure investment option is the Employee Provident Fund (EPF), providing easy access to the funds in the account. At the time of joining a firm, your account is created automatically by the firm and monthly contributions are directed in your EPF account. An EPF balance can also be checked by various online and offline methods. Offline methods include SMS services and missed call services. In an online method, you can easily log-in to your PF account on the website and attain all the information you need on your account. Similarly, the EPFO app can also be downloaded, and you can select the option of ‘Member’ and can attain the information by choosing balance or passbook.
Another option for investing for a long term secure plan is Bajaj Finance Fixed Deposits. They offer a higher interest rate with easy access to the funds deposited. The higher interest rates help in the rapid increase of the amount, and thus during an emergency, it becomes easy to utilize the amount. They also offer flexible tenor that later help in re-investing after the account is matured with higher interest rates.