What Is PF

What Is PF

PF:-
1952 PF (Provident Fund) or EPF Scheme was introduced under the Employee's Provident Fund and Miscellaneous Act. All laws and regulations are defined by the Employee Provident Fund Organization. EPFO operations are managed by the Department of Labor and Employment.

In this plan, the employer will collect the money by deducting it from your monthly salary. When you start working for a company, you and the organization deposit 12% of your basic salary into an EPF account. This salary includes any benefits provided by the company. You will receive a fixed interest rate on this amount based on the rules set by the EPFO. The total amount you earn and interest are exempt from tax.

12% of your salary goes to the EPF account and 3.67% to your company. The remaining 8.33% of the remaining 12% is transferred to the employee pension scheme. If your salary exceeds Rs6500, the company can only contribute 8.33% of that amount to EPS. The remaining balance amount is included in your EPF value. All people earning 15,000 and over must register under the EPF program. You can draw the entire amount from the account after you retire or leave the organization. In the event of your unfortunate death, your nominee or legal heir may deduct this EPF amount.

1. EMPLOYER CONTRIBUTION TO EPF:-

The minimum is 12% on a salary of Rs15,000 which means Rs800 per month. So both the company and you will donate Rs1800 to the EPF program. Apart from this rate, the employer must pay an additional 0.5% to the EDLIS (Employees Deposit Linked Insurance Scheme) which is insurance cover. Through this program, the nominee will receive a lump sum payment as a death benefit after your death. There are administrative costs for EPF and EDLIS to be borne by the employer. Payments of 1.1% of EDLIS and 0.01% of EPF included.

2. EPF INTEREST RATE:-

The EPF interest rate was 8.55% in 2017-18 and increased to 8.65% in the 2019 financial year. by the Government. but interest will only be collected through EPF account balance and not EPF funds. The interest rate applies between the 2018 and 2019 financial years. At the beginning of the financial year, you will have an opening balance in the EPF account collected up to that point. in the next financial year, the opening balance will be calculated as follows:

Open balance + contribution that has accumulated monthly + interest on previous opening balance and contributions. However, if no amount has been transferred to the EPF account for 3 years continuously, the account is inactive. Retired employees will not receive interest on the amount collected from an inactive account.

3. EPF TAX BENEFITS:-

Contributions from your company or employer to an EPF account are tax-free. With your donation, you can receive a deduction of up to Rs.1.5 lakh in terms of Section 80c of the IT Act. but If you do not wish to be enrolled in the EPF program, you should opt out of it at the beginning of your career. you must notify the company of this by completing form 11. If you are already registered and have a valid EPF account you will not be able to opt out.

Conclusion:-

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