What Are The Different Types Of Provident Fund?

There are different types of provident fund and you would be eligible to subscribe to them depending on your work place.

The rules governing subscription and other details would vary depending on your organisation.

Here are some of the different types of provident funds:

Statutory provident funds

Statutory Provident Funds are applicable to government bodies, universities etc. They are also known as Government Provident Funds. So employees who work for these institutions would be eligible to subscribe to them.

Recognised provident fund

Most of individuals working fall under this type of provident fund. This fund is applicable to an
organisation which employs 20 or more employees. It's important to note that all Recognised Provident Fund Schemes must be approved by The Commissioner of Income Tax.

Unrecognised Provident Fund

In an Unrecognised Provident Fund the employer and employees in an establishment together start the provident fund. However, the same may not be approved by The Commissioner of Income Tax. Since they are not recognised, they would have a different tax treatment as compared to RPFs.

Public Provident Fund

In a public Provident Fund, individuals are free to contribute an amount not exceeding Rs 70,000 per year by opening an account at a post office or banks like ICICI Bank and State Bank of India. PPF can serve as an excellent retirement planning tool, for those who do not come under any pension scheme. The PPF offers tax benefit under section 8OC and the interest earned is also exempt from tax. This has become an extremely popular government controlled scheme, which has a duration of 15 years with certain lock-in procedures to be followed.

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