WHAT IS PROVIDENT FUND?
“Provident fund is a fund which is composed of contributions made by the employeeduring the time he/she worked along with an equal contribution by his employer”
RATE : Provident fund is calculated as 12% of his/her basic salary & the same amount is contributed by the employer.however employee have a option to contribution more than 12%
DEPOSIT OF CONTRIBUTIONS:
Employers contribution of 12% of basic salary is totally deposited in provident fund account whereas out of employees contribution of 12% , 3.67% is contributed to provident fund & 8.33% is deposited in Pension scheme.
IS IT COMPULSORY FOR ALL EMPLOYEES TO CONTRIBUTE TO THE PROVIDENT FUND?
employees drawing basic salary upto Rs. 6,500/- have to compulsory contribute to the provident fund . however , employees drawing above Rs. 6,500/- say Rs. 6,501 have an option to become member of the provident fund.
1. Tax benefit u/s 80C
2. retirement benefit
3. withdrawal benefit
1.However if a person withdraw the amount of provident fund before the end of 5 years all the benefits he got u/s 80C against Provident fund will get reversed & added with the income in which withdrawal has been made & fully taxable . So be careful about the timing of withdrawal.
2.Benefits under the pension fund is available only after the continuous service of 10 years & after completing the age of 58 years . continuous service of ten year does not means to work with the same company but every time when a person change job ,the PF account must be transferred & continuous for ten years.
1. Form NO. 2 is required to be filled to become the member of the provident fund.it is called a Nomination Form .
2.Form no. 13 is required for transfer of Provident fund.
3.Form no. 19 is required for withdrawal of provident fund
4. Form no. 10C is required for withdrawal of pension fund.
All the forms are available with the HR department of the company .
provident fund plays a very important role because at the time of retirement a person get a healthy sum & pension amount subject to the conditions fulfilled as per provident fund Act.