Why to Get a PF Registration Done - The Benefits of a Provident Fund
The most significant tool in the arsenal of retirement planning is the Employee Provident Fund. When kept for long-term, it can not only meet retirement goals but also surpass them because:
- It has 100% tax-free interest
- Interest works on compound growth
What are the merits of Provident Fund?
- Twenty times the average wages of the past one year (up to Rs 6,500 per month) which comes out to be Rs 1,30,000.
- The full amount in the PF account (up to Rs 50,000) plus 40% of the balance amount.
- Provident Fund
- Employee Pension Scheme
When a person retires, they receive a pension which is dependent on:
- The median salary they in the year prior to retirement
- The number of years they have worked
- Be 58 years old or over
- Completed a decade of service without any withdrawals from it
It should be noted that there is a limit to the maximum amount of pension for each month - Rs. 3,500. There is a simple technique to bypass this limit if the employer uses the actual pay of the worker for contribution instead of the specified Rs. 6,500 per month.
- Unique Situations
- A Medical Emergency:
- 6 times the salary of the person
- Entire contribution made to the EPF till date
- Any Life Goal
This can be done up to three times in your service life. The only criteria to be met are:
- Valid document proving marriage or fee payable to the college
- Spent seven years in service
- Dream Home
- For house loan repayment, one can use wages of three years from the EPF as long as 10 years of services have been finished.
- For repair or modification at home, one can withdraw wages equal to twelve months. This requires an existing house and can only be done once. For alteration, the person has to complete 5 years of service and for repair 10 years.
- To purchase a new home, an employee need only to work for five years. The amount drawn can be used for buying a new house or plot and construction of a new home. If land is purchased, the total that can be taken out is 24 months of wages. For a house, the amount can be 36 months of salary. This quantity can be collected only once in life. The house or the plot can be in employees name, spouse name or as joint ownership.
- Damage due to natural calamities
- Equipment purchases by physically handicapped
- If the person changes jobs and remains without a profession for over two months
An EPF is the most robust retirement tool a company can give to their employees. It is why the government has made it mandatory for firms with over 20 employees to register for it. VakilSearch is a celebrated income tax return filing platform that also assists in online PF registration. They come highly recommended due to their quick and transparent process. Additionally, they even advise on the benefits employee provident fund gives to people.
Swing by their site or give them a call at +91 7200 365 365 to how EPF can save you!