From Interest To Insurance And From Pension To Tax Saving, Know What Facilities Are Available To PF Account Holders

Provident Fund (PF) is meant to cater to the retirement needs of employees. Every month some money is deducted from the salary of the employee so that after retirement, this money can be useful to him. Today we are going to tell you what benefits PF account holders get. The PF facility is provided to all employees by the Employees Provident Fund Organization (EPFO).

Benefit of insurance

• By default insurance is also available on opening of PF account.
• Under the Employees Deposit Linked Insurance (EDLI) scheme, PF account offers insurance up to 6 lakh rupees.
• The objective of the scheme is to provide financial security to the family member after the death of the employee.
• Under this scheme, the nominee can claim the sum insured after illness, accident or accidental death of the account holder.

Pension benefits

• 12% of basic salary plus DA to the employee goes to PF account.
• The company also contributes 12% of the employee’s basic salary plus DA.
• Out of 12% contribution of the company, 3.67% goes to the employee’s PF account and 8.33% to the employee pension scheme.

Interest on inactive accounts also

• PF account holders also get interest on inactive accounts.
• Interest will continue to accrue even if PF account is inactive for more than 3 years.

Tax saving

• EPF counts among the best options for saving tax
• There is no benefit in the new tax system.
• In the old tax system, up to 12% of salary will be tax deducted. This savings is tax exempt under Section 80C of the Income Tax Act.

Can withdraw money in PF account in between

• Government has given facility to withdraw some money before retirement in view of epidemic and unemployment.
• If an employee has been serving in a company for 5 years, then there is no liability for income tax on the withdrawal of PF.
• 10% TDS and tax deducted if the period of 5 years is not completed.

(Source: abplive.com)