Most of us are a part of EPFO and a part of our salary goes towards the EPF Scheme. There are certain things that you must know about EPS scheme are we have listed four such points which you must know about EPF Scheme.
Employer Contribution–Most of the people know this fact that the employer also contributes towards your PF account. The amount is same as the employee contribution, however, a part of employer contribution goes towards the pension of the employee. The employer also increases its contribution if your contributions go high because of increase in salary.
Higher Contribution Possible– A lot of people are not aware of this but the fact is that it is possible for you to make a higher contribution towards the Provident Fund. This is known as the voluntary contribution and you can increase this amount. The additional amount invested in PF is also tax-free and a lot of people use this way to save tax.
Withdrawal of PF– After the 3 to 5 years of service, you can also withdraw a part of your PF for various reasons. Some of the most common applicable reasons for withdrawal of PF includes the purchase of a house, construction of house or repayment of house loan. Apart from this, you can withdraw PF for the marriage of a family member of education of the child as well.
Tax on Pre-Mature Withdrawal– Many employees are confused about the taxation of the withdrawal of PF before 5 years. As per the rule, the interest earned on PF during these years is taxed in this case and apart from that, the employee would also have to pay taxes on the benefits claimed under section 80C during all these years.
These are the four important things you must know about EPF Scheme and knowing these things will surely be helpful for you in future.