Provident Fund (PF) is a government-managed retirement Savings Scheme for employees who can contribute a part of their pension fund every month. These monthly savings get accumulated every month, easily accessible as a lump sum amount at retirement or the end of employment. * Form 19, 10C, 31, 13, etc. are used for PF.
Objectives
- Retirement Savings: Its main objective is to provide employees with a means to accumulate funds for their retirement.
- Long-term Investment: The funds are typically invested in a long term basis in various instruments such as fixed deposits, government securities, bonds, or equities to generate returns over time.
- Financial Security: By contributing to a provident fund, employees can achieve financial security during their retirement years.
Benefits of Provident Fund
Equal Contribution made by the employee and employer
Interest offered on accumulated fund
Amount can be withdrawn under unemployment
Ideal Requirement Fund
No Tax Deduction
Criteria of Provident Fund
- Employment Status: Provident funds are available to employees who are in a formal. employment relationship with an organization.
- Contribution: Both the employee and the employer contribute a specific percentage of the employee's salary to the provident fund.
- Mandatory Participation: Participation in a provident fund may be mandatory for both the employer and the employee.
