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PF

Engagedly

What Is PF (Provident Fund)?
PF, or Provident Fund, is a government-mandated retirement savings scheme where both employees and employers contribute a fixed portion of the employee’s salary. It aims to provide financial security after retirement and helps individuals build long-term savings.

How Does PF Work?
Each month, a portion (typically 12%) of an employee’s basic salary is deducted and deposited into the PF account. The employer matches this contribution. The fund earns interest, which is compounded annually and exempt from income tax under certain conditions.

Types of Provident Fund in India

  1. EPF (Employees’ Provident Fund): Mandatory for organizations with 20 or more employees.
  2. PPF (Public Provident Fund): Voluntary, long-term savings scheme available to all Indian citizens.
  3. GPF (General Provident Fund): Applicable to government employees.

Benefits of PF

  • Long-term financial stability post-retirement
  • Tax benefits under Section 80C
  • Loan or partial withdrawal options for emergencies
  • Employer contribution adds to overall savings

When Can You Withdraw from Your PF?
PF can be withdrawn:

  • After retirement
  • Partially, for specific needs like home purchase, medical emergencies, or education
  • After 2 months of unemployment (full withdrawal)

Why PF Matters
PF helps create a disciplined savings habit and provides a financial cushion during retirement. For employers, it’s a critical component of employee benefits, improving retention and financial well-being.

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