Provident Fund is a mechanism to protect the salaried people in old age after retiring from service, the Government has introduced "a retirement benefit scheme" called the Employees Provident Fund Scheme. The main purpose of the scheme is to provide a compulsory saving out of the current income of the employee. The employer gives the employee the saved amount together with the interest at the time of retirement.
While the money accumulates in the fund, the Government uses it for the development projects in the country. So, by investing in Provident Fund, you serve two purposes.
- You provide savings for yourself in old age, and
- you help in the development projects of the country.
The main features of Provident Fund are:
- Every month, a certain percentage of the basic salary is compulsorily deducted from the employee’s salary. This deduction is the contribution towards the fund.
- An interest is worked on the contribution. A record of the contributed money and the interest earned on it is maintained by the employer. A copy of the same is also given to the employee.
- The money deposited and the interest on it are both exempt from income tax.
- You can take a loan against the money deposited.
Types of Provident fund
There are two types of Provident Fund Schemes:
- General Provident Fund (GPF)
- This is suitable for all salaried people. If desired, the employee can increase the contribution towards the fund. At the time of retirement, the employee gets both, the contribution and the interest, in a lump-sum.
- If the employee needs money before retirement, say, for the marriage of children or for the construction of a house, a loan can be taken from the Provident Fund.
- The money withdrawn can be returned to the fund in easy instalments every month.
- Employee's Provident Fund (EPF)
- Any self employed person can open this account with the State Bank of India or the post office.
- The money may be deposited either regularly in instalments or in lump-sum.
- After five years, the investor can take back certain percentage of this money.
- The investor also enjoys income-tax relief.
- Loan can be taken against the money invested in the fund.
Annual Statement of GPF Accounts
After the close of each financial year, the Accounts officer shall send to each subscriber an Annual Statement Of Accounts in the Fund showing the opening balance as on the 1st April of the year, the total amounts credited or debited during the year, the total amount of interest credited as on 31st March of the year and the closing balance on that date.
Subscribers should satisfy themselves as to the correctness of the annual statement and errors should be brought to the notice of the Accounts Officer within 3 months of receipt of the statement. The details of missing credits will also be shown in the said statement.
How can someone know the GPF statement of a particular period or year?
Every subscriber of GPF should receive his/her statement during April/May for his verification and record. If you have not received the statement of 2011-2012, you can intimate to your employer first and the Accounts Officer concerned if required. They are the one who responsible to provide your GPF statement. Alternatively you can view your statements if you use the respective websites of State Government