Are you saving for your future? Provident Fund (PF) is a way to make your future secure and financially secure which helps you to raise long-term funds for retirement. This scheme is run by the Employees Provident Fund Organization (EPFO) and the government also supports it.

Provident Fund is a long-term savings plan in which you can save a part of your salary every month, and the best part is that it is a government-backed scheme, meaning the government also contributes to it. Currently, EPFO ​​​​is offering 8.25% interest on PF funds for the financial year (FY25) 2024-25. With the support of the government, this scheme is considered a reliable savings scheme and a smart way to better financial health.

Under the Provident Fund (PF) Regulations, employers must contribute to the Provident Fund. It works by taking monthly contributions from both the employer and the employee. All the employees in this scheme are deducted from their monthly salary, which goes to their PF fund. The same amount is also contributed from the employer's account. EPFO ​​rules apply to institutions with 20 or more employees.

Understand the PF scheme better.

The objective of the PF scheme is to create a long-term pension corpus for salaried people. Many employees have questions about how the PF scheme works, its benefits, and withdrawal rules. To help you, answers to some frequently asked questions are given here.

How much contribution is made to the PF scheme?

The employee has to contribute 12% of his basic monthly income to the Provident Fund (PF) scheme. It is also mandatory for the employer to contribute the same amount. A portion (8.33%) of the employer's contribution goes to the Employees' Pension Scheme (EPS), and the rest goes to PF.

Employees in which income bracket are required to contribute to EPF?

Employees whose monthly salary (basic + dearness allowance) is up to Rs 15,000 are mandatorily required to contribute to the Employees' Provident Fund (EPF). However, those with a monthly income of more than Rs 15,000 can also voluntarily choose to contribute to EPF if their employer allows it.

Can you withdraw PF funds before retirement?

Some regulations allow employees to partially withdraw their PF amount during certain emergencies. These include house construction, loan repayment, and marriage, among other things. Apart from this, withdrawal of PF amount is also allowed during a long period of unemployment. For example, if a contributor remains unemployed for more than 1 month, he can withdraw up to 75% of his PF balance. If the period of employment reaches two months, one can withdraw the entire 100% of his PF balance.

Are you required to contribute during unemployment?

Under the EPFO ​​rules, both employers and employees are required to contribute to PF. Therefore, people do not need to make any contribution to PF during unemployment.

Are PF withdrawals taxable?

As per the rules, PF withdrawals made before completing 5 years of continuous service are taxable. Apart from this, interest earned on an employee's EPF contribution of more than Rs 2.5 lakh in a financial year is also taxable.

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