Employees’ Provident Fund Organisation (EPFO) gives the facility of PF to all employees. For this, a small deduction is made from salaries of the employees. This is done to secure their future after retirement. However, there are several other benefits that PF account holders are entitled to and very few people are aware about it. We will understand some of these benefits
Free Insurance facility.
As soon as your PF account is opened, you get insurance by default. You get an insurance of Rs 6 lakh under Employees Deposit Linked Insurance (EDLI). A nominee or legal heir of an active member of EPFO gets a lump sum payment of up to ₹ 6 Lakhs in case of death of the member during the service period. This benefit is provided by companies and central government to their employees.
EPF is the most simple and best option to save money in tax. EPF account holders can save 12% in taxes on their salary under Section 80 C of the Income Tax. This benefit has been done away in the new taxation system, however, you can avail this benefit by opting for old tax system for computing your tax.
Pension benefit post retirement
Under EPFO ACT, 12 percent of employees’ basic salary and Dearness Allowance (DA) is deposited in PF account. Similarly, companies also contribute 12% of basic salary and DA, of which 3,67% goes in the employees’ account and remaining 8.33% in employees’ pension scheme.
Interest on Inactive account
Interestingly, It also gives interest on inactive PF accounts of employees. As per the changes made in the Act in 2016, now PF account holders will continue to get interest on even those accounts which have been lying inactive for more than three years. Earlier, there was no provision of getting interest on accounts lying inactive for three years…Read more>>