Employee Provident Fund (EPF) or Employees' Provident Fund is a popular savings scheme, which aims to provide financial security to salary-based employees for retirement. The Employee Provident Fund Scheme operates under the EPF Scheme Act of 1952, EDLI Act of 1976 and Pension Scheme Act of 1995.
Under this scheme, both the employee and the employer contribute 12-12% of the employee's basic salary to the EPF account. In this scheme, the government revives the interest every year, and it is also tax free. At the time of retirement from the Employee Provident Fund, the employee gets the amount deposited in the PF account in lump sum, which also includes the interest earned.
This is how a fund of Rs 2.5 crore will be created on a salary of Rs 50,000.
If you want to deposit a fund of Rs 2.5 crore in PF account, then for this your salary (salary + basic) should be Rs 50 thousand. Also, you will have to work for at least 30 years. For this you should get 8.1 percent interest on PF fund. Besides, your salary should also increase at the rate of 5 percent annually. If you complete all these things then at the time of retirement you will have a corpus of Rs 2.5 crore.
What is the eligibility to become an EPFO member?
To become an EPFO member, you have to work in the organized sector, it is necessary to have a company with 20 or more employees. Being a member of EPFO, one gets savings, insurance cover, pension and interest free interest. Along with this, you can also withdraw money from this fund in case of emergency.
Tax exemption in EPFO account
If you have an EPFO account and PF is being deposited in it every month, then this is the best option to save tax. Let us tell you that this facility is not available in the new tax regime, for this you will have to choose the old tax regime. If you choose the old tax regime, you can save up to 12 percent in tax on your salary under Section 80C.
Free insurance facility in EPFO
Employees who have a PF account also get insurance by default. Under Employee Deposit Linked Insurance (EDLI), the employee is insured up to Rs 6 lakh. In case of death of an active EPFO member during his service period, up to Rs 6 lakh is paid to his nominee or legal heir. Companies and the central government provide this benefit to their employees.
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