The Provident Fund, which is mandatory for every employee who fulfills Rs 15,000 threshold for monthly PF contribution, is generally considered a retirement-oriented investment option. Under Section 80C of the income tax act, an employee gets income-tax exemption on a PF contribution of up to Rs 1.5 lakh in a financial year. The Employees’ Provident Fund Organisation (EPFO) provides various other benefits to its members.
Here are 5 PF account benefits
1 Loan against PF: A PF account holder can take a loan against their PF balance and the PF loan interest rate levied is only 1 percent if there is a financial emergency. Within 36 months of loan disbursal, the loan has to be repaid.
2 Free insurance: Under EDLI scheme, in case of death during the service period, a PF account holder by default becomes eligible for free insurance up to Rs 7 lakh. Previously, the death cover was Rs 6 lakh. Under the EDLI scheme, the PF account holder need not pay any insurance premium for the death cover.
3 Home loan and hole loan repayment: One can withdraw up to 90 percent of the PF balance for buying a new home or constructing a home, as per EPFO rules. So, PF account can be used for home loan repayment and through PF balance, one can buy land as well.
4 Partial withdrawal during an emergency: Subject to some terms and conditions, in case of medical or financial emergency, EPFO allows partial withdrawal…Read more>>