Provident fund is a better option to meet the need of money in emergency. There are many facilities available to the member on PF account. These include tax exemptions including pension benefits etc.
Provident fund money is very useful in meeting the needs of money in emergency. During the Corona period, the convenience of the people has increased due to the facility of withdrawing up to 75 percent of the amount from the government. There are many benefits of PF account, in which tax exemption is available on investment up to Rs 1.5 lakh under section 80C in income tax. Along with this, strong interest is also available on this. Hence it helps in adding better funds in future. For PF account related benefits, EPFO has made some rules, which are very important to know.
No tax on withdrawing money after 5 years
If someone wants to withdraw PF money during the job, then keep in mind that you must have at least 5 years while doing the job. Actually, if you withdraw money from PF account before 5 years, you will have to pay tax. Whereas after 5 years, the benefit of tax free facility is available on withdrawal.
interest accrued on the account
There are two types of EPF accounts. First active account, second deactive account. Active account with regular investments. Whereas inactive account in which no new investment has been made for 3 years. Interest is earned every year on both active and deactive accounts. Although earlier, interest was not available on the deactive account, but from 2016 onwards interest was also paid on it. EPFO will not pay interest if the account holder is retired and the account has become inactive.
Helps in adding strong funds
At present, 8.50 percent interest is being given on the investment of EPF. Compounding interest is added to this, so the fund adds more in less time. It has more benefits in long term investment. However, many people withdraw PF money in case of change of job or emergency.
return on retirement fund
According to EPFO, if the EPF member never withdraws PF money during his job, then the fund received by him at the time of retirement will be completely tax free. Apart from this, you will get the benefit of continuous compounding interest, which will add a huge amount. However, after retirement, if there is a delay in withdrawing money from the EPF account, then tax will have to be paid on the interest earned on your amount. This is because, the facility of tax exemption on the interest of EPF is only for the employees.
pension facility
If no withdrawal has been made from the PF account before retirement, then you will also get the benefit of pension. Under the EPS (Employee Pension Scheme) scheme of EPFO, you will get pension every month. It should be known that some part of the amount deposited by the employer in EPF also goes to the pension fund. Pension starts from this pension fund after 58 years.
