There are some changes that have been made in the employees provident fund account in the last few days. Here are a few things that you should know, which should make you happy.
Rs 50,000 extra, if you complete 20 years
If you have contributed to the scheme for 20 years, you get an extra Rs 50,000. This is a loyalty benefit that has been approved recently by the trustees. Now, whether this would be also applicable to individuals who have withdrawn amounts during the last 20 years is now known.
Nevertheless, this is a welcome initiative from the body and should help build the corpus of people who are retiring. In case of permanent disability, you get the amount, even if you have not completed 20 years.
So, how does the extra break up work. Subscribers to the EPF with average basic wages of up to Rs 5,000, will will get a benefit of Rs 30,000. Members with wages of Rs 5,001-10,000 will be entitled to an extra Rs 40,000.
On the other hand, subscribers who are getting more than Rs 10,000 monthly wage will be eligible for Rs 50,000 loyalty-cum-life benefit under the proposed scheme. So, it is highly possible that bulk of the employees would come under this category.
Interest rates much better
It was largely expected that the interest rate would be fixed at 8.60 per cent. However, Labour Minister Bandaru Dattatreya said EPFO subscribers will get 8.65 percent interest. This was marginally lower than 8.80 per cent of the previous year, but, is much better than any bank deposit or any government scheme in the country. So, if you have not been contributing larger amounts, it may not be a bad idea to do so, given the fact that you get a very decent interest rate.
Taxation on EPF
For private sector employees deciding to withdraw their employees provident fund, it is important to remember that even if there is an emergency you should not withdraw your EPF, since there is a tax that you have to pay if you withdraw the amount before 5 years.