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 At the time of retirement or resignation from employment, the accumulated amount can be withdrawn by the employee if conditions related to the scheme are satisfied.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 Fund
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.
- When you can withdraw balance from your Employee Provident Fund account
- What to do if employer not depositing to your EPF Account
- How to withdraw money from your Provident Fund Account without employer’s signature
- How to know your Employee Provident Fund balance Online
- How to withdraw balance from your EPF account
- How to check your Employee Provident Fund claim status online
- How to check your EPF balance online
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
- How to open a PPF account with SBI
- Top 10 reasons of investing in PPF scheme
- Common Frequently asked questions on PPF
- How to get paid from PPF on death of a subscriber
- How to withdraw money from your PPF account
- How to invest in PPF scheme
- Tax benefits on investing in PPF
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).