If you're a working professional in government services or the private sector, you would have noticed a salary slip deduction with the letters PF next to it.
This blog will unravel the four types of provident funds in India and the Employee Provident Fund (EPF) in India.
A provident fund is an investment fund set up to save for long-term goals such as retirement. In India, we have different types of provident fund plans for individuals from various categories of employment, such as self-employed, private sector employees, and government employees.
You may be eligible for different provident funds depending on the nature of your employment. Here is a preview of the common types of provident funds available in India.
In the above case, if the Commissioner of Income Tax (CIT) disapproves of the provident fund scheme, it becomes an unrecognised fund.
Here, the contribution will be distributed between the Employees' Provident Fund (EPF) and the Employee's Pension Scheme (EPS) as follows:
In this case, the contribution will be distributed between the Employees' Provident Fund (EPF) and the Employee's Pension Scheme (EPS) as follows:
Here is a blog that takes you through using an EPF calculator and understand your EPF contribution.
Use this calculator to see how much your contributions will be worth at the time of your retirement.
Provident funds are investment funds for long-term savings, particularly for retirement. In India, various types of provident funds exist based on employment categories, including Statutory Provident Fund, Recognised Provident Fund, Unrecognised Provident Fund, and Public Provident Fund. The most common type is the Employees' Provident Fund (EPF), prevalent in private sector organisations. Understanding these funds is essential for effective financial planning and a secure future.
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If you are a private sector employee, the term 'Provident Fund' in your salary slip typically means EPF of Employees' Provident Fund. It is a provident fund where the employee and the employer make equal contributions to the account throughout the employee's working years — thus leading to a sizeable corpus by the team an employee retires.
Depending on the conditions you fulfil, you can make a partial withdrawal or a complete withdrawal from the Employees' Provident Fund (EPF). Whatever the nature of your withdrawal, you can proceed by applying online or in person.
A partial withdrawal is permitted for specific purposes such as medical needs, wedding costs, educational expenses, land purchases, etc.
On the other hand, you can effect a complete withdrawal when you retire or have been unemployed for more than two months.
Recognised Provident Fund (RPF) is registered with EPFO and follows tax rules. Meanwhile, an Unrecognised Provident Fund (URPF) doesn't do so. Contributions to RPF are tax-deductible, while contributions to URPF are not. Withdrawal, portability, and employer contributions are the other differences between RPF and URPF.
The Employees' Provident Fund (EPF) is a retirement benefits scheme managed by the EPFO in India. It is a mandatory savings scheme for salaried employees, where a portion of their salary is contributed towards this scheme each month. The EPF provides employee benefits such as retirement savings, financial security, and life insurance.
In India, the following individuals are eligible for the Employee Provident Fund (EPF):