Employees’ Provident Fund

EPF stands for Employees’ Provident Fund. It is a retirement benefits scheme where both an employer and employee contribute equally to this scheme. Both must contribute around 12% of the basic salary to this fund. 

At the time of retirement, the employee gets a lump sum and interest on it.

EPF Work

In this Employees’ Provident Fund, both employee and employer contribute to this fund. The contribution is to the tune of 12% of basic salary, with dearness allowance taken into account if paid.

However, not all of an employer’s contribution goes to EPF. An employer contributes around 3.67% of the 12% to this fund. The remaining 8.33% goes to this Employees’ Pension Scheme.

Benefits of EPF

There are plenty of benefits for investing in this Employees’ Provident Fund. They are as listed below:

Capital Appreciation

There is a fixed rate of interest available in this EPF India scheme. Moreover, the EPF also earns an interest even when lying dormant.

Corpus for Emergencies

Because of specific premature withdrawal rules, the EPF can act as an emergency corpus.

Corpus for Retirement

The main reason people invest in the EPF is to get a retirement corpus. The corpus gives investors a sense of security.

Tax Saving Scheme

Employees’ Provident Fund comes under Section 80C of the Income Tax Act. Therefore, even the earnings from this EPF scheme are exempt from taxes.

Therefore, there are many benefits of making an EPF contribution.