Now a day’s people have become more curious about saving their financial and get benefited at the time of retirement. When talking about the savings schemes and pension plans its very important or us to know about the EPF India. It is nothing but an Employees Provident fund Organisation where both employer and employee sacrifices certain amount of the Basic salary of the Employee to the EPF India. As it became compulsory for EPF contribution for their own pension scheme It is said to be an issue for people who were earning in the lower bracket of salary. the final salary per month came down to be not sufficient for their monthly expenses, often driving them to debt.
India is comparatively conscious about debt but is helpless in such situations. Hence EPF India has been formatted to eradicate ll the problems faced by the employees. Now in this session let us clearly discuss some of the interesting facts about EPF contribution, what are the benefits of EPF contribution, will it be worth saving the amount through EPF India and many more interesting facts.
Brief Description about EPF Contribution:
It’s quite important for a human being to work and develop their family and especially for the men. When a person starts working in an organisation (industry) both the employer as well the employee needs to contribute 12% of employee’s basic salary which also includes dearness allowances, if any into the EPF account. The entire 12% of employee’s contribution goes into his EPF account along with 3.67% (out of 12%) from employer’s EPF contribution. while the balance 8.33% from the employer’s side is diverted to your EPF contribution through EPF India. (Employee’s Pension Scheme). It’s is very important to note that if your basic pay is above Rs. 6,500 per month, the employer contributes only 8.33% of 6,500 (i.e. Rs. 541) to your EPF contribution and the balance goes into your EPF account.
This EPF contribution generates an interest of 8% – 12%, which is decided by the government and the central board of trustees. The annual interest rate is held available on the official EPF India website, and is currently at 8.75%. You can easily check your EPFO status by just logging in to the EPF India Portal. If employee changing his/her job then it’s important to update your new EPF contribution details information planned by the new company. Regularly checking of the EPFO status is quite important as sometimes the employer may skip for paying the EPF contribution. At the time of retirement employee can easily tae away the EPF withdrawal amount available for him/her.
Benefits of EPF Contribution:
The EPF contribution by employer to your EPF India account is tax-free. Only the employee EPF contribution is tax-deductible under Section 80C of the Income Tax Act. The money you invest as EPF contribution, the interest generated and EPF withdrawal amount are completely exempted from income tax.
Is it must to pay EPF Contribution?
It is not a rule that every employer must generate EPF contribution but it is recommended to do so. The only time you can opt out of the EPF India is at the start of your career, when you tell your first boss that you don’t want to be a part of it and fill out Form 11. If during your employment time any amount is transferred to EPF contribution towards EPF India at least once and have an account created in your name, you cannot opt out of this scheme, then the only think you can do is to check your EPFO status regularly and claim the EPF withdrawal amount at the time of retirement.
Will any Interest be generated through EPF contribution?
A compound interest will be accumulated which was at first planned by the government and central board of trustees is paid on the amount standing to the credit of the employee as on the 1st of April every year else at the time of retirement you can get the EPF withdrawal amount.
While employee’s EPF contribution is generated monthly, the interest for such EPF contribution is calculated yearly. At the start of every year, you have check your EPFO status i.e. an opening balance which is the amount accumulated till that point. Your EPF contribution opening balance for the next year would be: opening balance + total monthly EPF contribution + interest on the old opening balance + EPF contribution.
So, what more are you thinking for just start generating EPF contribution and regularly check your EPFO status so that you can easily have an estimation of the final amount available for you through EPF withdrawal held ready in your EPF account.
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