Desk
Share
EPFO: The Employees’ Provident Fund Organization (EPFO) helps its users in many ways. So that people can take benefit of it without much hassle. EPFO offers several services including balance inquiry, account transfers, and more. For every working individual, a portion of their salary gets deposited into their PF account each month. This is managed by EPFO. Interest is paid on the deposited money. PF money is deducted every month from the employee’s salary. There is always a question of ‘how it works, ‘let’s discuss in detail.
In every organization you work for and have a fixed salary, you will lose 12% of pay each month through EPF. Your employer matches 12%, though a portion goes toward the Pension Scheme (EPS) and the remaining is credited toward EPF. PF account is a kind of long term survival savings. This money is safe with EPFO. On behalf of the citizen, it is invested with the utmost care through government-backed instruments like bonds.
Complete math of money deposit
In the example, let us consider a scenario where a person’s basic salary and DA amounts to ₹25,000, then ₹3,000 (12%) is automatically deducted. Similarly, your organization will also contribute 12% of the salary, some part of it towards EPS (Employee Pension Scheme). In lieu of this, ₹1,250 (which is 8.33% of ₹15,000) goes towards EPS and the rest ₹1,750 is credited to EPF. This results in a total of ₹4,750 (₹3,000 yours + ₹1,750 of the company) being credited to EPF monthly. Additionally, every year government adds some interest on this amount, further boosting your savings.
Be aware of your PF money
The EPF amount acts as your social as well as financial pillar. Forgetting about it is similar to neglecting your secured future. Within a few minutes, you can track the account of your hard-earned penny. Simply download your EPF passbook and take charge of your finances being an informed and smart employee.
Tax relief will be accessible
One of the benefits of EPF schemes is that they can also aid in tax savings; however, there is a cap beyond which they may become taxable. In the event that an individual's EPF contribution exceeds ₹2.5 lakhs in a year, any interest earned on the excess contribution will be taxable. Interest earned on contributions of up to ₹2.5 lakh is tax-exempt. For any amounts contributed towards EPF for a minimum of five consecutive years, the tax on the withdrawal will be zero. However, should the account go dormant, that is, should no new deposits be made for three years, the interest earned on the account will be taxable.
Read More: UIDAI Updates Verification Rules to Replace Physical Aadhaar Photocopies with Offline Method
