Employees’ Provident Fund Organization (EPFO) has cut interest on PF account for the financial year 2021-22. Now you will get interest at the rate of 8.10% instead of 8.5% on the amount deposited in PF account.
Every month some money is deducted from the salary of the employee for EPF or PF. So that after retirement this money can be used for them. However, PF account holders get many benefits apart from this. Few people would know about it. Today we are telling you about such benefits.
Get more interest
EPFO may have cut the interest on PF account for the financial year 2021-22, but even after this, the interest rate available in it is higher than other government schemes like PPF and FD. In such a situation, you will get more interest on whatever money you deposit in it.
6 lakh free insurance
You also get by-default insurance as soon as you open a PF account. Under the Employees’ Deposit Linked Insurance (EDLI) scheme, your PF account gets insurance up to Rs.6 lakh. EDLI provides for a lump sum payment to the designated beneficiary of the insured in case of death due to natural causes, illness or accident. The objective of this scheme is to provide financial security to the family member after the death of the employee. This benefit is given to the employee by the company and the central government.
Tax Savings
PF is one of the most common and best option to save tax. There is no benefit in this in the new tax system. But in the old tax system, you will get tax exemption up to 12% of the salary contribution. This savings is tax exempted under section 80C of the Income Tax Act.
Pension benefits after retirement
Under the EPFO Act, 12% of the basic salary plus DA to the employee goes to the PF account. So at the same time, the company also contributes 12% of the basic salary plus DA of the employee. Out of the 12% contribution of the company, 3.67% goes to the PF account of the employee and the remaining 8.33% goes to the employee pension scheme.
Intermediate withdrawal facility
In view of the pandemic and unemployment, the government has given the facility to withdraw some money before retirement. Meaning you can use it by withdrawing money from your PF fund at any time of need. This will save you from loans. If the employee completes 5 years of service in any company and withdraws PF, then there is no income tax liability on him. 10% TDS and tax is deducted on non-completion of 5 years period.
Interest is also available on closed account
PF account holders also get interest on dormant accounts. That is, even if your PF account is inactive for more than 3 years, you will continue to get interest. This change has been made by EPFO in 2016. Earlier, interest on PF money would stop if it was inactive for 3 years.
