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Provident Fund

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 Provident fund contributions are eligible for tax benefits under Section 80C and the accumulated amount can be withdrawn at retirement or separation from the employer. However, early withdrawal within 5 years will result in lost tax benefits and additional taxes on the withdrawn amount.

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21 views2 pages

Provident Fund

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 Provident fund contributions are eligible for tax benefits under Section 80C and the accumulated amount can be withdrawn at retirement or separation from the employer. However, early withdrawal within 5 years will result in lost tax benefits and additional taxes on the withdrawn amount.

Uploaded by

Srinivasarao Bendalam
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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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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