EPFO or Employees Provident Fund Organization has been coming up with many initiatives for EPF (employee provident fund) subscribers. Let us have a look at some of the most important benefits EPFO offers to employees which you might be unaware of....
Free Insurance benefit
The moment your PF account is opened, you get insurance benefit by default. You get an insurance of Rs 6 lakh under Employees Deposit Linked Insurance (EDLI). A nominee or legal heir of an active member of EPFO gets a lump sum payment of up to ₹ 6 Lakhs in case of death of the member during the service period. This benefit is provided by companies and central government to their employees.
Income tax let-off under 80C
EPF is the most simple and best option to save money in tax. EPF account holders can save 12% in taxes on their salary under Section 80 C of the Income Tax. This benefit has been done away in the new taxation system, however, you can avail this benefit by opting for old tax system for computing your tax.
Pension advantage after retirement
Under EPFO ACT, 12 percent of employees’ basic salary and Dearness Allowance (DA) is deposited in PF account. Similarly, companies also contribute 12% of basic salary and DA, of which 3,67% goes in the employees’ account and remaining 8.33% in employees' pension scheme.
Withdrawals from PF account
According to the EPF Act, for claiming final EPF settlement, one has to retire from service after attaining 55 years of age. The total EPF balance includes the employee's contribution and that of the employer, along with the accrued interest. There is, however, a window to partially withdraw the amount for those nearing retirement or before that Anyone over 54 can withdraw up to 90 percent of the accumulated balance with interest. Employees can withdraw a certain amount only if required under the PF Act. The money can be used for both your personal and professional requirements. However, to avail these benefits, the account holders are required to be members of EPFO for a certain period of time.
Interest on dormant account
The best part about PF is that there is also interest received on inactive PF accounts of employees. As per the changes made in the Act in 2016, now PF account holders will continue to get interest on even those accounts which have been lying inactive for more than three years.