The employee provident fund is a popular investment scheme for people working in a private sector. This scheme has many other added benefits apart from tax saving.
Read through the benefits of Employee Provident Fund Scheme
- Tax free – The funds in your EPF account is tax free. If you wish to withdraw your EPF money at the time of maturity, the amount is free of tax. However, you will be taxable if you withdraw the amount before 5 years of continuous service.
- Long term investment – This provides financial security. The scheme encourages its members to refrain from withdrawing their funds before maturity.
- Pension Scheme – 8.33% out of the 12% contribution of the employer is towards the pension scheme. Hence a member can also benefit from the pension plan available.
- Easily accessible – With the linking of Aadhar to the UAN, a member can transfer his/her PF funds during the transfer of jobs automatically by submitting Form 13.
- Insurance benefits – If there is an absence of group life insurance, the employer has to contribute 0.5% of the basic pay towards life insurance. Although this amount might seem less, it definitely adds on to the various benefits.
- Special added benefits – The funds in the EPF account can be used during occasions like
- Medical emergencies – There is no limit of minimum contribution during medical emergencies
- Housing – After contributing for 3 years, you are eligible to with draw your PF to purchase or construct a new house or flat. In case of renovations you need to contribute for a minimum period of 5 years.
- Marriage or Education – After contributing for a period of 7 years, 50% of your PF amount can be withdrawn for a maximum of three times.
- Loss of income – If a person faces a situation of unemployment, then he/she can use the PF amount as a supplement income.
- Death – In case of the account holder’s death, the accumulated amount will be transferred to the listed beneficiary.