Insurance to pension — 5 advantages of PF account that you have to know
An workers’ Provident Fund (PF) account is usually thought-about a retirement-oriented funding possibility, which is obligatory for every worker who fulfills ₹15,000 threshold for month-to-month PF contribution. An worker will get revenue tax exemption below Section 80C of the revenue tax act on one’s PF contribution as much as ₹1.5 lakh in single monetary yr. However, there are numerous different advantages that Employees’ Provident Fund Organisation (EPFO) envisages for its members. These PF advantages embrace free insurance coverage and pension advantages too.
Speaking on the PF account advantages past revenue tax exemption and retirement fund accumulation SEBI registered tax and funding skilled Jitendra Solanki mentioned, “An employee needs to look at one’s PF account beyond a retirement fund accumulator and an income tax saver. In fact, there are various other benefits that a PF account must know and should pass it on to others who also have PF account or an EPFO subscriber.”
Asked in regards to the 5 PF account advantages past revenue tax Jitendra Solanki listed out the next:
1] Free insurance coverage: A PF account holder by default turns into eligible without spending a dime insurance coverage as much as ₹7 lakh in case of loss of life throughout the service interval below EDLI scheme. Earlier, the loss of life cowl for PF account holder was ₹6 lakh however now it has been enhanced as much as ₹7 lakh. Most importantly, the PF account holder want to not pay any insurance coverage premium for this loss of life cowl supplied below the EDLI scheme.
2] Pension provision: A PF account holder is eligible for pension after 58 years as effectively. However, to turn into eligible for pension, there must be minimal 15 years common month-to-month PF contribution required in a single’s PF account. The pension profit comes from the employer’s contribution as 8.33 per cent of its contribution (out of 12 per cent) goes to the EPS account of the PF account holder.
3] Loan towards PF: In the case of monetary emergency, a PF account holder can take mortgage towards one’s PF stability and the PF mortgage rate of interest levied is just one per cent. The mortgage might be brief time period in nature and must be repaid inside 36 months of mortgage disbursal.
4] Partial withdrawal throughout emergency: EPFO permits partial withdrawal in case of medical or monetary emergency topic to some phrases and situations.
5] Home mortgage and gap mortgage compensation: One can use one’s PF account for house mortgage compensation. As per the EPFO guidelines, one can withdraw as much as 90 per cent of the PF stability for getting a brand new house or setting up a house. One can purchase land as effectively utilizing one’s Pf stability.
Subscribe to Mint Newsletters * Enter a sound e mail * Thank you for subscribing to our publication.
Never miss a narrative! Stay related and knowledgeable with Mint.
Download
our App Now!!
