You should know about Benefits of PF account

You should know about Benefits of PF account

The Provident Fund, which is mandatory for every employee who fulfills Rs 15,000 threshold for monthly PF contribution, is generally considered a retirement-oriented investment option. Under Section 80C of the income tax act, an employee gets income-tax exemption on a PF contribution of up to Rs 1.5 lakh in a financial year. The Employees’ Provident Fund Organisation (EPFO) provides various other benefits to its members.

Here are 5 PF account benefits

1 Loan against PF: A PF account holder can take a loan against their PF balance and the PF loan interest rate levied is only 1 percent if there is a financial emergency. Within 36 months of loan disbursal, the loan has to be repaid.

2 Free insurance: Under EDLI scheme, in case of death during the service period, a PF account holder by default becomes eligible for free insurance up to Rs 7 lakh. Previously, the death cover was Rs 6 lakh. Under the EDLI scheme, the PF account holder need not pay any insurance premium for the death cover.

3 Home loan and hole loan repayment: One can withdraw up to 90 percent of the PF balance for buying a new home or constructing a home, as per EPFO rules. So, PF account can be used for home loan repayment and through PF balance, one can buy land as well.

4 Partial withdrawal during an emergency: Subject to some terms and conditions, in case of medical or financial emergency, EPFO allows partial withdrawal…Read more>>