GPF: The General Provident Fund (GPF) is a savings scheme for government employees, where they contribute a portion of their salary monthly. Upon retirement, this fund earns a tax-free lump sum along with 7.1% interest, ensuring financial security for their future.
If you work in a government job, a portion of your salary is deducted every month for schemes like PF, VPF, and GPF. Today, we’ll discuss the General Provident Fund (GPF), which is specifically designed for government employees. A portion of every government employee’s salary is deposited into the GPF every month, resulting in a substantial sum at retirement.
How does GPF work?
The most important feature of the GPF is its security; it remains under complete government control and is unaffected by stock market fluctuations. Currently, the GPF earns a 7.1% interest rate, which is reviewed by the government every three months. However, this rate has remained unchanged over the years, providing stable benefits to employees.
If an employee makes regular deposits into a GPF for 15 years, he or she can receive a substantial sum of approximately ₹31,60,000 upon retirement. A 10-year investment can yield up to ₹17.2 lakh. Best of all, the interest earned on GPF is tax-free, and the deposits are also tax-deductible. This makes it not only a secure retirement savings tool but also a great tax-saving option.
Who can invest in GPF?
GPF is available only to government employees appointed before January 1, 2004. For employees appointed after that, the NPS (National Pension System) applies. A portion of their basic salary and DA (dearness allowance) must be contributed to GPF every month. Employees can choose this contribution from 6% to 100%, depending on their convenience.
Why is GPF necessary?
The GPF provides government employees with financial security for their future. The large retirement corpus, tax-free interest, and the convenience of regular savings make it even more valuable. For employees who are eligible for it, the GPF is a reliable and beneficial scheme that eliminates the worry of fund shortages at the time of retirement.
