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Employees can create a retirement fund by contributing to the Employment Provident Fund (EPF), a long-term investment scheme. There are several financial and tax advantages to maintaining a balance in your PF account. Index Fund Corner Sponsored Scheme Name 1-Year Return Invest Now Fund Category Expense Ratio Axis Nifty 50 Index Fund +32.
80% Invest Now Equity: Large Cap 0.12% Axis Nifty 100 Index Fund +38.59% Invest Now Equity: Large Cap 0.
21% Axis Nifty Next 50 Index Fund +71.83% Invest Now Equity: Large Cap 0.25% Axis Nifty 500 Index Fund -- Invest Now Equity: Flexi Cap 0.
10% Axis Nifty Midcap 50 Index Fund +46.03% Invest Now Equity: Mid Cap 0.28% One of the biggest advantages of maintaining a PF balance is the financial security after retirement.
Every month, an employer deducts a fixed amount from your salary and deposits it into the EPF account. Over time, your account will have a substantial amount, which can be used to meet post-retirement expenses. You don't have to rely on others to fulfil your needs and demands.
When you keep money in the EPF account, you earn compound interest. This means you don't just earn interest on the money you deposit, but also on the interest that has already been added to your account. So, the interest is calculated on the new amount.
The PF interest rate is fixed by the government every year. For financial year 2024-25, the interest rate is fixed at 8.25%, which is the same as the previous year.
Contributing to an EPF account also makes you eligible for tax deductions under Section 80C of the Income Tax Act, 1961. If your total contribution to the EPF account in a financial year is less than or equal to ₹ 2.5 lakh, then the interest earned on it is tax-free.
However, if your contribution exceeds ₹ 2.5 lakh, the interest earned on the excess amount will be taxable. The amount in your PF account can also act as a financial backup for your emergencies.
While full withdrawal is only permitted in extreme circumstances, partial PF withdrawals are allowed under certain conditions, such as medical treatment, home loan repayment, higher education or marriage of children. Maintaining a balance in your PF account can also provide insurance benefits under the Employees' Deposit Linked Insurance (EDLI) scheme. So, if an active PF account holder dies during employment, their nominee will get life insurance cover.
With compound interes t and monthly contributions, the PF balance continues to increase, which helps in the gradual buildup of wealth. Maintaining a balance in your PF account allows your savings to increase, which also supports your future financial goals..
