Can an employee contribute more than 12% of basic salary towards EPF:
Employees’ Provident Fund is a retirement investment plan that every salaried individual opts for. Employee usually contributes 12% of their basic pay and employer contributes 13.61% towards the Employee Provident Fund.
If the employee wishes to contribute more than 12% of the basic pay, he or she can contribute more. Depending on the employee’s convenience, he or she can increase the contribution to 100%. But, it is not required by the employer to increase the contribution, it remains fixed.
Benefits of having an EPF Account:
The benefits of having an EPF account are as follows:
- Money will be accumulated till your retirement, resignation or death. You will also earn interest on the accumulated amount and you will also be eligible for the bonus.
- Partial withdrawal is allowed for meeting the expenses such as house construction higher education, marriage, illness, etc.
- It is the most tax-friendly tool that helps you build retirement corpus.
- If you withdraw the amount after working for 5 consecutive years, the amount will be totally exempt from tax under Section 80C of the Income Tax Act.
- The rate of interest for the financial year 2015-2016 has been declared at 8.70%.
- EPFO has decided to make all the payments to beneficiaries through the electronic modes.
- You can avail the Life Insurance cover, EDLI under EPF.
- To channelize the savings, SEBI and top stock exchanges have requested the new Central Government to allow a portion of the corpus in equities and mutual funds.
- SEBI has also suggested to invest the Rs.5.5 lakh crore managed by EPFO in equities and mutual fund.
- Bombay Stock Exchange has requested that the EPF money be assessed to both the primary and secondary markets.
- The SEBI and BSE investment will generate higher returns for the retired.
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