Provident Fund

Provident fund is a scheme by the Government of India by which: A fixed percentage is deducted from your salary and A fixed percentage added by the company This amount is kept in an account, which accumulates and is then received back after retirement.

Types of Provident Fund



Statutory Provident Fund (SPF) Statutory Provident Fund is maintained by the Government and Semi-Government Semidepartments like Railways, Reserve Bank of India, Colleges, Universities, Local bodies, Insurance companies etc., Recognized Provident Fund (RPF) - It is a (RPF) fund to which the Commissioner of Income-tax Incomehas given the recognition as required under the Income-tax Act. Income-

Unrecognized Provident Fund (URPF) - It is the Provident Fund, which is not recognized by the Commissioner of Income-tax. The employee Incomeand employer both contribute towards this fund. The employee s contribution to URPF will not be allowed any tax rebate. Public Provident Fund (PPF) Self-employed Selfpeople (doctors, lawyers, accountants, actors, traders, pensioners) can also enjoy the benefit of tax rebate under section 88 by contribution to PPF.

How PF affects payroll



As per Amendment dated 22/9/1997, in the Act, both the employees and the employer contribute to the fund at the rate 12% of the basic salary, dearness allowance and retaining allowance if any, payable to employees per month. i.e. 12% (Basic + D.A. + R.A)

Withdrawal of PF
Criteria for Withdrawal of PF A member of the PF can withdraw the full amount on retirement from service after attaining the age of 55. The full amount can also be withdrawn if:  A member who has not attained the age of 55 at the time of termination of service.  Member is retired on account of permanent and total disablement due to bodily or mental infirmity.  On migration from India for permanent settlement or employment abroad.  In case of mass or individual retrenchment

Withdrawal before retirement A member can withdraw up to 90% of the amount of PF after attaining the age of 54 years or within one year before actual retirement, whichever, is later.

Employee Provident Fund Scheme

Employees' Provident Fund Scheme takes care of following needs of the members: (i) Retirement (ii) Medical Care (iii) Housing (iv) Family obligation (v) Education of Children (vi) Financing of Insurance Polices

Reference: https://www.hraide.com/Provident.htm http://www.epfindia.com/epf.htm