The proposal for reduction in PF interest rate given to employees under the Employees’ Provident Fund Scheme has been placed with the Ministry. The interest rate for the year 2022 has been reduced from 8.5% to 8.1%. This has dealt a big blow to the employees. But still the interest paid to the employees is higher than other government schemes and savings schemes.
Along with interest, the government also provides many more facilities to the employees, in which many more benefits like loan facility, insurance to tax exemption are given. Here are six such benefits. Let us know how many more benefits employees can get under one PF account.
loan benefits
If you have a PF account and you are an old employee then you can easily take advantage of the loan facility. In case of emergency, you can get a loan at 1% under the EPFO account. However, you have to pay the loan amount within 36 months, otherwise you will be charged more interest.
free insurance benefits
EPFO account holders get the benefit of insurance as well as loan. Under the EDLI scheme, if an employee dies while working, he gets a free insurance benefit of up to Rs 7 lakh. These employees do not have to pay any premium for insurance. Earlier, the death cover under the EDLI scheme was Rs.6 lakh.
tax saving
PF is one of the most common and best option to save tax. There is no benefit in this in the new tax system. But in the old tax system, up to 12% contribution of salary, you will get tax exemption of up to 1.5 lakhs. This savings is tax exempted under section 80C of the Income Tax Act.
Home Loan & Whole Loan Repayment
According to the EPFO rules, one can withdraw up to 90 percent of the PF balance to buy a new house or build a house. Which can be used to buy land and repay home loan.
emergency evacuation
On the other hand, EPFO allows you to make partial withdrawals in case of medical or financial emergencies, subject to certain terms and conditions. You can make this withdrawal according to your PF balance.
pension benefits
PF account holders can take benefit of pension even after 58 years. However, to become eligible for the pension, one must have at least 15 years of regular monthly PF contribution in one’s PF account. The pension benefit comes from the employer’s contribution as 8.33 per cent (out of 12 per cent) of his contribution goes to the EPS account of the PF account holder.