Types of Provident Funds in India – PPF, EPF, SPF and UPF

In India we have different types of provident funds which is created to address needs of different section of people. In this article we will be looking into these different type of provident funds to know the reason of creating it.

Employee Provident Fund -EPF

EPF or Employee Provident Fund is one of the popular type of provident fund in India which is created for the benefit of those who are into the payroll of a company i.e. in employment.

Every month certain specified sum based on the basic pay and dearness allowance of employee is deducted by the employer from employee’s salary as his contribution to get it invested in EPF account of employee.

Employer also contributes equal percentage of salary of the employee to the Provident Fund account.

Both contributions from employees and employer are invested and the interest earned on these is credited to the Provident Fund account. At the time of retirement or resignation from employment, the accumulated amount can be withdrawn by the employee if conditions related to the scheme are satisfied.

Statutory provident fund or SPF

SPF or Statutory Provident Fund is another type of provident fund which is only meant for Government or Semi-Government employees, university or educational institutions affiliated to a university established under the statue or other specified institution. This scheme is set up under the Provident Fund Act, 1925.

Recognized Provident FundTypes of Provident Fund in India

Any person who has employed 20 or more employees in an organization, is under an obligation to register himself under the Provident Fund Act, 1952 and starts a Provident Fund scheme for the employees in his organization after three years of its establishment.

However if the employer wants, such scheme can be started even though the employee is less than 20 or even if the commencement of business is less than three years.

Employer also has a choice to join government’s scheme or can start his own Provident Fund scheme after getting approval from Provident Fund commissioner and from Commissioner of income tax.

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Unrecognized provident fund

It’s a scheme where you don’t have an approval from the Provident Fund commissioner or from the commissioner of income tax.

Public provident fund (PPF)

It’s covered under the Public Provident Fund Act, 1968. Any public whether in employment or not, may contribute to Public Provident fund account.

Employee has an option to contribute to Public Provident Fund (PPF) in addition to any of the above discussed provident fund schemes. A self employed person can have his account opened under public provident fund scheme in any barch of post office or in any bank like SBI, ICICI or HDFC and start contributing to it.

As decided the minimum contribution under this scheme is Rs. 500 and Maximum Rs. 1, 50, 000 per year. The payment made to public provident fund account and the interest obtained can be withdrawn after a period of 15 years. The applicant also has an option of extending this scheme for another 5 years term at the end of 15 years period.

The rate of interest with effect from 1st April 2013 is 8.7% per annum

Out of the above list we have two provident funds which are most important and known for its use. The first type of provident fund is Employee Provident Fund (EPF) and the second one is Public Provident Fund (PPF).

2 thoughts on “Types of Provident Funds in India – PPF, EPF, SPF and UPF

  1. Sandipan Hore

    I had been working with Nuclear Power Corporation of India limited for about 2 years 4 months. The organisation is administered under EPF Act 1925. On resignation the NPCIL refused to provide me employers share of PF stating that I had not completed 5 years of continuous service to NPCIL. This I feel is not as per rules of the land. I request for kind advise in this regard.

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