EPF funds are one of the most prestigious employee savings funds that are most prevalent in India since it’s the establishment. This has been made, considering the future of the salaried employees who provide their services to a company. Herein in this, both employers and employees contribute about 12 % of the basic pay to their account. With years of long service, you could collect a handsome sum of money with which you could own a new house. Apart from this, many benefits further escalate the importance of Provident funds. Some of them are known to us. But we might tend to forget these as there are ample benefits related to the provident fund’s scheme. So in this article, we would go through all the benefits of the Employee Provident Fund Scheme(EPF).
Benefits Of EPF Scheme
The employee provident fund scheme provides us with a lot of benefits. It helps in incorporating a sense of financial security within the employees. This has been a backbone for retirement plans for salaried employees. So, let us look into them one by one :
1. Capital Appreciation:
The contributions you make into the EPF account are subjected to a free-fixed interest rate. This interest rate stands to be 8.55 % as of the year 2020. Moreover, these funds are further aggregated with additional rewards that accelerate capital appreciation.
2. A Healthy Retirement Sum:
With the contributions made by both employer and employee, about 15.67% out of 24 % goes into your EPF account directly. Moreover, the rest, which is 8.33%, is contributed to your Employee Pension scheme. These accounts be a good sum as a whole. The EPF sum of money that you receive is in a lump sum amount, and the Benefits of EPS are provided in terms of pension after your retirement. This retirement age stands to be 58 years.
3. Emergency Funds:
The emergency situations come knocking at your door without any prior indications. Therefore, to get through with these situations, it becomes of utmost importance to be financially prepared. Moreover, employees having low salaries face difficulties to pay through medical expenses. Under these situations, EPF funds can go a long way to fulfill your needs and requirements.
4. Tax Benefits:
The contribution that the employee makes is deemed to be exempted entirely from taxes. In addition to this, the earning that you make in as interest over your deposits is also tax-exempted. That is, the lump-sum withdrawal of a big amount that you accumulate over the years is fully tax-free. But such exemptions stand to be subjected to a threshold value of 1.5 lacks on your earnings. This ensures employees remain high-earning individuals and have high purchasing power in later stages of their life too.
5. Easy Premature Withdrawal:
If an employee is a member at the EPFO portal online, then he/she can tap into premature withdrawal. There are various norms under which this can be made, some of which are constructing a house, bearing marriage expenses, pursuing higher education, etc.
EPF scheme have been well known for the diversity of benefits that it provides to its contributors. It helps employees to tap into these funds for various reasons, as stated above. This has been in action since the establishment of this scheme. It has fulfilled thousands of needs in difficult times. With the belief of the government with EPFO, we should always look forward to having or continue our EPF contributions.