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    Provident Fund

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    Srinivasarao Bendalam
    Provident fund is a mandatory retirement savings plan in India whereby employers and employees each contribute 12% of the employee's basic salary. Employers deposit the entire 12% contribution to the provident fund, while employees' 12% contribution is split with 3.67% going to provident fund and 8.33% to pension scheme. Provident fund contributions are eligible for tax benefits under Section 80C and the accumulated amount can be withdrawn at retirement or separation from the employer. However, early withdrawal within 5 years will result in lost tax benefits and additional taxes on the withdrawn amount.

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    Provident Fund

    Uploaded by

    Srinivasarao Bendalam
    9 views2 pages
    Provident fund is a mandatory retirement savings plan in India whereby employers and employees each contribute 12% of the employee's basic salary. Employers deposit the entire 12% contribution to the provident fund, while employees' 12% contribution is split with 3.67% going to provident fund and 8.33% to pension scheme. Provident fund contributions are eligible for tax benefits under Section 80C and the accumulated amount can be withdrawn at retirement or separation from the employer. However, early withdrawal within 5 years will result in lost tax benefits and additional taxes on the withdrawn amount.

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    Provident fund is a mandatory retirement savings plan in India whereby employers and employees each contribute 12% of the employee's basic salary. Employers deposit the entire 12% contribution to the provident fund, while employees' 12% contribution is split with 3.67% going to provident fund and 8.33% to pension scheme. Provident fund contributions are eligible for tax benefits under Section 80C and the accumulated amount can be withdrawn at retirement or separation from the employer. However, early withdrawal within 5 years will result in lost tax benefits and additional taxes on the withdrawn amount.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    9 views2 pages

    Provident Fund

    Uploaded by

    Srinivasarao Bendalam
    Provident fund is a mandatory retirement savings plan in India whereby employers and employees each contribute 12% of the employee's basic salary. Employers deposit the entire 12% contribution to the provident fund, while employees' 12% contribution is split with 3.67% going to provident fund and 8.33% to pension scheme. Provident fund contributions are eligible for tax benefits under Section 80C and the accumulated amount can be withdrawn at retirement or separation from the employer. However, early withdrawal within 5 years will result in lost tax benefits and additional taxes on the withdrawn amount.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    of 2

    PROVIDENT FUND

    WHAT IS PROVIDENT FUND?


    Provident fund is a fund which is composed of contributions made by
    the employeeduring the time he/she worked along with an equal contribution by
    his employer
    RATE : Provident fund is calculated as 12% of his/her basic salary & the same amount
    is contributed by the employer.however employee have a option to contribution more than
    12%
    DEPOSIT OF CONTRIBUTIONS:
    Employers contribution of 12% of basic salary is totally deposited in provident fund
    account whereas out of employees contribution of 12% , 3.67% is contributed to provident
    fund & 8.33% is deposited in Pension scheme.
    IS IT COMPULSORY FOR ALL EMPLOYEES TO CONTRIBUTE TO THE
    PROVIDENT FUND?
    employees drawing basic salary upto Rs. 1,5000/- have to compulsory contribute to the
    provident fund . however , employees drawing above Rs. 15,000/- say Rs. 15,001 have an
    option to become member of the provident fund.
    ADVANTAGES:
    1.
    Tax
    benefit
    u/s
    80C
    2.
    retirement
    benefit
    3. withdrawal benefit
    NOTES:
    1.However if a person withdraw the amount of provident fund before the end of 5 years
    all the benefits he got u/s 80C against Provident fund will get reversed & added with the
    income in which withdrawal has been made & fully taxable . So be careful about the timing
    of
    withdrawal.
    2.Benefits under the pension fund is available only after the continuous service of 9.6 years
    & after completing the age of 58 years . continuous service of ten year does not means to
    work with the same company but every time when a person change job ,the PF account must
    be transferred & continuous for ten years.
    FORMS REQUIRED:
    1.Form NO. 2 is required to be filled to become the member of the provident fund.it is
    called
    a
    Nomination
    Form
    .
    2.Form
    no.
    13 is
    required
    for
    transfer
    of
    Provident
    fund.
    3.Form
    no.
    19 is
    required
    for
    withdrawal
    of
    provident
    fund
    4. Form no. 10C is required for withdrawal of pension fund.
    All the forms are available with the HR department of the company .

    provident fund plays a very important role because at the time of retirement a person get
    a healthy sum & pension amount subject to the conditions fulfilled as per provident fund
    Act.

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