What are the tax-benefits of employee pf contribution?
The advantage of this strong scheme is that the contribution made towards EPF is a suitable deduction under section 80C. The maximum deductible contribution is maximum the limit of section 80C i.e. Rs.1.50 lakh for the current financial year.
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Another related PF questions and answers
Is contribution to employee pf compulsory?
Yes, contributing to EPF is compulsory for the employees who have a basic salary plus dearness allowance is up to Rs.15,000. And those who are grossing above Rs.15,000 may contribute willingly.
But the choice to opt out of scheme should be taken at the start of your job. In case, you have been a member of EPFO once, then you are not allowable to opt out of the organization.
Further, selecting out of the scheme will rise your in hand salary and thus your tax outgo will also rise, so it is strongly suggested to benefit this scheme as this is the coolest way to build a huge quantity for retirement.
Which one is better Epf vs. Ppf?
Premature withdrawal means taking money out from the EPF account before 5 years of constant service. Please note that constant service means a constant contribution for 5 years. If you left the job after 3 years but made withdrawals after 5 years then also it would take as premature withdrawal and the full withdrawn amount would be taxed.
The budget has charged 10% TDS on premature withdrawal if exceeds Rs.30,000.
Provident Fund is for a self-employed person. But a salaried person can enjoy the advantage of both EPF as well as PPF while a self-employed person can only take profit of PPF.
What is prohibited withdrawal of epf money?
As per EPF rules, withdrawing of EPF money at the time of exchanging jobs is prohibited. You can withdraw only and only if you have not joined any other company within two months of vacating the job. You can transfer your EPF money once you get a new job.
Is there any other advantage of epf?
One more advantage of EPF account holder is that it gives a life insurance cover of Rs.60,000. This comes from the Employees Deposit Linked Insurance Scheme and for this employers have to contribute 0.50% of your monthly basic pay as premium for your life cover. But businesses that already provide life insurance benefits or group insurance policy to employees are relieved from contributing to this scheme.