What is provident fund explain?
What is provident fund explain?
A provident fund is an investment fund that is voluntarily established by Employer and employees to serve as long term savings to support an employee’s retirement. Sources of fund: Employee’s contribution: The amount deducted from the employee’s salary at a rate of 2% – 15%.
What is the main purpose of the provident fund?
The primary purpose of PF fund is to help employees save a fraction of their salary every month so that he can use the same in an event that the employee is temporarily or no longer fit to work or at retirement.
What is provident fund and its benefits?
The Employees’ Provident Fund or EPF is a popular savings scheme that has been introduced by the EPFO under the supervision of the Government of India. The savings scheme is directed towards the salaried class to facilitate their habit of saving money to build a substantial retirement corpus.
What are the different types of provident fund?
Depending on different tax conditions and their implications, there are four types of funds, including:
- Statutory Provident Fund.
- Recognized Provident Fund.
- Unrecognized Provident Fund.
- Public Provident Fund.
- Statutory Provident Fund (SPF): The local authorities, government agencies, railways, universities, etc.
Who introduced provident fund?
Employees’ Provident Fund Organisation
| Native name | कर्मचारी भविष्य निधि संगठन |
|---|---|
| Key people | Neelam Shammi Rao, Indian Social Security Service |
| AUM | ₹11 lakh crore (US$140 billion) |
| Owner | Ministry of Labour and Employment, Government of India |
| Website | epfindia.gov.in |
Who invented provident fund?
Employees’ Provident Fund Organisation
| Native name | कर्मचारी भविष्य निधि संगठन |
|---|---|
| Founded | 4 March 1952 |
| Headquarters | Bhavishya Nidhi Bhawan, 14, Bhikaiji Cama Place, New Delhi , India |
| Key people | Neelam Shammi Rao, Indian Social Security Service |
| AUM | ₹11 lakh crore (US$140 billion) |
When was provident fund established?
Three years after the establishment of Employees Provident Fund Department, “Employees Provident Fund Act, 1962” was enacted and accordingly EPF, as an autonomous body to manage provident fund, was formally incorporated on 16th September 1962 (BS 2019 Bhadra 31).
What type of account is provident fund?
Employees’ Provident Fund (EPF) and Public Provident Fund (PPF) are two types of retirement savings plans. EPF is a mandatory contribution from the salary of an individual that every organization with more than 20 employees has to deduct. On the other hand, PPF is an optional investment avenue with income tax benefits.
What is PF advantages and disadvantages?
Liquidity: Despite the return the risk and tax benefits are one drawback of the Provident Fund is the lack of liquidity with regards to access to these funds. Money that you invest in Provident Fund cannot be withdrawn until you’re unemployed for 2 months or until retirement.
How provident fund is calculated?
To calculate your provident fund contribution, add both employer and employee contributions. The employer contributes 12% towards the PF balance, whereas the employee contributes 3.67% towards the PF balance. The employer’s contribution of 12% towards the PF balance depends on the employee’s basic pay.
When was provident fund Act passed?
1925-08-27
Language
| Act ID: | 192519 |
|---|---|
| Enactment Date: | 1925-08-27 |
| Act Year: | 1925 |
| Short Title: | The Provident Funds Act, 1925 |
| Long Title: | An Act to amend and consolidate the law relating to Government and other Provident Funds. |
What is provident fund under Labour law?
The Government introduced the Employees Provident Fund, through the Employees Provident and Miscellaneous Provision act, 1952. It was enacted to provide compulsory benefits to the retired employees or benefits to the family of the employee who died other than natural death. Retirement is a part of human life.
What are components of PF?
EPF: The Basic Construct
- The first part of EPF is where your retirement benefits are accumulated.
- The second part of EPF is the employee pension scheme (EPS).
- The third and final part of EPF is the Employee Deposit Linked Insurance Scheme or EDLI, which is a life insurance cover.
Who can withdraw PF?
— You can withdraw up to 90 percent of your PF money one year before retirement. But you must be above 54 years of age. — You can use a part of your PF money for medical expenses, natural calamity, purchase of equipment by the physically handicapped, closure of factories, cut in electricity in establishments.
Is provident fund good?
NPS comes with great tax benefits – tax deduction on the subscription, which is over and above Sec 80C & retirement corpus being partially tax-free. While the pension is taxable, it is preferable for those subscribers who want regular income in retirement.
Who will get the benefit of provident fund?
EPF Eligibility It is mandatory for salaried employees with an income of less than Rs. 15,000 per month to register for an EPF account. As per law, it is mandatory for organisations to register for the EPF scheme if they have more than 20 employees working for them.
What is provident fund in salary?
The provident fund is a combined contribution from you as well as your employer that is deducted from your salary every month and put away in a PF account where it grows into a sizeable sum that you can avail after retirement.
Who introduced provident fund in India?
Who is applicable for PF?
All employees drawing a salary are eligible for EPF. Moreover, it is compulsory for all employees earning less than ₹15,000 to register for the EPF. However, employees earning more than ₹15,000 can also voluntarily stay in the EPF scheme.
What is PF contribution rate?
Contribution Rate for Employee’s Salary up to Rs. Employee contribution to EPF: 12% of salary. Employer contribution to EPF: 3.67% of salary. Employer contribution to EPS: 8.33% of salary subject to a ceiling of Rs. 15,000 salary, i.e. Rs. 1,250.
Is Provident Fund a good investment?
The Public Provident Fund is a savings scheme that was initialised by National Savings Institute however it has made some efforts to be more flexible by absorbing some national and private banks. It’s a reliable and one of the safer schemes as it is enforced by the government and channelised through the Post Office.
What is the role and function of Provident Fund?
EPFO helps the Central Board in administering the Pension Scheme,which is compulsory for an employed individual.
What are the differences between a provident and a pension fund?
The major difference between a pension fund and a provident fund lies in the fact that whereas all the money is released as benefit to the employee in case of a provident fund, only one third of the amount is given to the employee at the time of retirement in case of pension fund, while he gets remaining two thirds over his life time in installments
What are provident funds and its types?
Types of provident funds. There are mainly three different types of PFs, which are as follows: The general provident fund is a type of PF which is maintained by government bodies, including local authorities, the railways, and other such bodies; The recognized provident fund is the one that applies to all privately-owned organizations that have more than 20 employees.