In India, there are different types of provident funds designed to meet the needs of various groups of people. In this article, we will explore the most common types of provident fund schemes.
Employee Provident Fund (EPF)
The Employee Provident Fund (EPF) is a savings scheme for employees in India. It is mandatory for companies with 20 or more employees to register under the Provident Fund Act, 1952 and start an EPF scheme after three years of operation. However, an employer can start the EPF scheme earlier, even if they have fewer than 20 employees or have been in business for less than three years.
Employers can either join the government’s EPF scheme or create their own, with approval from the Provident Fund Commissioner and the Income Tax Commissioner.
Each month, a part of the employee’s salary, based on basic pay and dearness allowance, is deducted by the employer and deposited into the employee’s EPF account. The employer also contributes the same amount to the employee’s EPF account. Both the employee’s and employer’s contributions earn interest, which is credited to the account yearly.
When the employee retires, resigns, or leaves the company, they can withdraw the accumulated amount, provided they meet the conditions set by the EPF scheme.
Statutory provident fund or SPF
The Statutory Provident Fund (SPF) is for government and semi-government employees, university staff, and other specific institutions. This scheme is governed by the Provident Fund Act, 1925.
Unlike the EPF, which is meant for employees in private companies, the SPF is for those working in the public sector or government-related organizations.
Also Read:
- When you can withdraw balance from your EPF account
- What to do if employer not depositing to your EPF Account
- How to withdraw money from your EPF Account without employer’s signature
- How to know your EPF balance Online
- How to withdraw balance from your EPF account
- How to check your EPF claim status online
- How to check your EPF balance online
Unrecognized provident fund
An Unrecognized Provident Fund is a scheme where the employer does not have approval from the Provident Fund Commissioner or the Income Tax Commissioner. This type of fund does not have the same official status as the EPF or SPF.
Public provident fund (PPF)
The Public Provident Fund (PPF) is open to all Indian citizens, whether employed or self-employed. It is governed by the Public Provident Fund Act, 1968. People can contribute to the PPF in addition to any other provident fund schemes they are part of.
A person can open a PPF account at any post office or participating bank (such as SBI, ICICI, or HDFC). The minimum annual contribution to the PPF is Rs. 500, and the maximum is Rs. 1,50,000. The amount invested in the PPF and the interest earned can be withdrawn after 15 years, with the option to extend the account for another 5 years.
Key Benefits of Investing in PPF:
- Tax benefits: Contributions to the PPF are eligible for tax deductions under Section 80C of the Income Tax Act.
- Long-term savings: PPF is a secure, long-term investment option for those looking to save for retirement or other long-term goals.
You can open a PPF account at banks like SBI or in any post office. The process is simple, and you will need to submit identification documents and proof of address.
Whether you are an employee, government worker, or self-employed, there is a provident fund scheme designed to help you save for the future.
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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.