Provident Funds, its Benefits and Eligibility: NationLearns

By | July 8, 2020

Provident fund is a saving scheme that counted as requisite accounts that need to be sustained by every individual employee as an essential thing after their retirement. This scheme has introduced by EPFO under the regulation of the Government of India. The employee contributes some portion of his/her salary every month into the PF account and, the employer must credit to employee accounts on behalf of the employee.

The EPF scheme has served to over more than 4Crores of individuals and, it is governed by three different acts, which are named, the Employees’ Provident Fund Scheme Act, the Employees Deposit Linked Insurance Scheme Act, and the Employees Pension Scheme Act.

There are Different types of PFs and its benefits:

  1. General Provident Fund: It is provided only to the government employees. It allows government employees to contribute some percentage of amount every month to Provident fund throughout the employment term and, it also allows them to claim after retirement.
  2. Recognized Provident Fund: It applies to the employees who belong to the privately-owned company or organization that has more than 20 employees. The employee has provided with a UAN number where the employer transfers the monthly percentage of salary in the account.
  3. Public Provident Fund: It is a kind of investment scheme for the Employees who are looking for long term investments who are looking to earn high but stable returns. The main reason to open a PPF account for an individual is to keep the principal amount safe.

Benefits:

  1. Tax Saving
  2. Capital appreciation
  3. Collection for Retirement
  4. Emergency Fund collection

The EPF scheme offers an 8.5% interest rate, and the amount received in an account is tax-free. The interest is paid only to the operative PF accounts, who are about to retire.

Eligibility to Claim EPF: 

An individual employee can opt to claim the partial or complete withdrawal of EPF under certain circumstances. They are:

  1. On or After Retirement: The Employee can claim the overall amount which has been in his/her account at the age of retirement to spend post-retirement life securely.
  2. Unemployed for Two months: If an individual employee has left the previous job and he/she is unemployed for more than two months then, he/she is eligible to Claim the EPF amount.
  3. For his/her Wedding: An individual can claim the partial amount if he/she is getting married and needs money for the spendings that can happen to conduct a wedding.
  4. For Higher Education: An individual can claim the partial amount for a Higher Education, especially when it needs to be done abroad.
  5. For Housing: An individual can claim the partial amount to renovate his house, buying a property, constructing a new house, repayment of home loans, etc.

There are certain ways where you can claim the amount either Offline or Online.

UAN numbers will be provided by an Employer that will be activated through your mobile number. Activated UAN is linked to your Aadhaar card, and the bank account details will be provided. An employee needs to verify their KYC details before proceeding with further instructions. An individual can go ahead by filling various forms such as Form-10C, Form 19, Form 31, etc.

 

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