What is a Provident Fund?
A Provident Fund is a government-managed retirement savings scheme. This is compulsory for all employees in India. They can contribute a part of their savings to a pension fund. This can be done on a monthly basis. The monthly savings will then become accumulated every month. The employees can access the entire amount as a whole when they retire. As the provident fund money consists of a huge amount of savings, it can also be used for growing one’s retirement corpus.
Types of Provident Funds
There are three main types of Provident Funds:
SPF (Statutory Provident Fund) – This is only for people who are employed in government/semi-government companies. These include educational institutions, and government-run institutions, and Railways.
UPF (Unrecognized Provident Fund) – This scheme is not approved by the commissioner of income tax or the PF commissioner.
PPF (Public Provident Fund) – Any person who is employed or not employed can contribute towards the PPF scheme. All salaried employees have an option to contribute towards PPF other than the EPF scheme.
Benefits of Employees’ Provident Funds
Corpus for Retirement
Around 8.33% of your contribution will be directed towards the Employee Pension Scheme. The total amount deposited towards this fund will help you in building a retirement corpus. This corpus will give you a sense of independence and financial security once you reach retirement.
The Provident fund online scheme gives you a pre-fixed interest on your deposit. The rewards which are extended at maturity will make sure that there is growth in your funds and will also accelerate capital appreciation.
Section 80C of the Indian Income Tax Act says that your contribution towards your Provident Fund account will be eligible for tax exemption. The earnings that are generated via your EPF scheme will be exempted from taxes. You can avail of an exemption of up to a limit of Rs.1.5 lakh.
Being financially prepared for facing uncertain situations is the best you can do for dealing with exigencies. The EPF fund will be an emergency corpus when you need emergency funds. The tax benefits which will be applicable to the Employees Provident Fund scheme will make sure that there are high earnings for you.
Easy premature withdrawal
Every member of EPF India will be entitled to get the benefits of partial withdrawal. You can withdraw funds from your PF account for meeting requirements like constructing a house, pursuing higher education, wedding expenses, and also medical treatment.
KYC Documents for Provident Funds
Submitting your KYC (Know Your Customer) documents is a crucial step towards the opening and opening your provident fund account. After the KYC documents have been verified and seeded with your provident fund account, the transfer of your account and viewing of the passbook becomes easier.
Now, as an employee, you can submit three different types of claims without any attestation from your employer – Form-19, 10C, and 31. You must make sure that your UAN (Universal Account Number) is activated and the bank account and Aadhaar KYCs have been approved by the Employer using the Digital Signature Certificate.
To update/change your KYC details on the UAN EPFO portal, you will need a UAN (Universal Account Number).
You can log in to the EPFO UAN portal and follow the steps on the website for making changes to the details. You can make corrections to your date of birth, name, and gender.
You can seed your PAN, Aadhaar, bank account details via the portal after your UAN has been activated by the employer. Your claim will have to be submitted online without any attestation from your employer.
For linking your Aadhaar with the UAN, you should visit the eKYC portal. You can also track the status of the eKYC on the website. After you have linked your PAN and the UAN, the EPFO services can be availed via the ‘UMANG’ which is a mobile app.
Keep in mind that when you link your PAN and the provident fund balance is over Rs.50,000 and the service has been rendered for less than 5 years, 10% of the TDS (Tax Deducted at Source) will be deducted.