What is EPF or PF? Are these two the same?
EPF is the acronym for "Employee Provident Fund." It is popularly known as Provident Fund (PF) or Tax saving PF among people. It is a long-term investment instrument. It ensures a financially secure retirement for the beneficial person. Here, both the employee and employer make a periodic contribution to the PF account. This total contribution will turn out to be a lump sum of PF money in the individual's PF account. He can use it at the age of 58 after his retirement.
What do you mean by EPF? And how to use it?
The government of India introduces Financial Acts to reform the direct tax system. So many provisions in those acts remove difficulties faced by Indian Taxpayers. Three different Financial Acts direct the Tax Saving PF scheme: ○ Employees' Provident Fund Scheme Act, 1952, ○ Employees' Pension Scheme Act, 1995 & ○ Employees' Deposit Linked Insurance Scheme Act, 1976.
What are the benefits of Tax Saving PF?
○ Many investment instruments, such as PPF, FD, NPS, Mutual Funds, etc., are available in the marketplace. ○ Yet it is being noticed that salaried persons found the Tax Saving PF alluring. ○ They consider the EPF scheme as one of the safest instruments. ○ People can efficiently operate it once it gets registered at the EPFO portal. ○ Put a glimpse at its other benefits: ○ It offers an excellent interest rate. ○ It is a low-risk investment instrument. ○ It provides tax exemptions under the beneficial Exempt Exempt Exempt scheme. ○ It is an ideal scheme for retirement pension once you touch the age bar of 58 years.
Why is the EPF account known as Tax Saving PF?
It is an easy retirement investment instrument. It helps people to avail of up to 1.5 lakh tax deductions under Section 80C. If the annual contribution does not exceed Rs.2.5 lakh, then PF interest is tax-free. You only need to pay income tax on PF interest when your annual PF contribution exceeds Rs. 2.5 lakh. Earlier, there was a possibility of misuse of the employee's PF money. It may happen that the employers didn't deposit the PF contribution at EPFO on time. It leads to a loss of interest earned on PF money for the employee. To overcome this problem, the Budget 2021 came with an amendment. There is no expense deduction for employers who don't submit it on time