Saving money isn’t the only reason to maintain a healthy balance in your Employee Provident Fund (EPF). In addition to safeguarding your future, it also guarantees tax savings and aids in emergency management.
You and your employer both contribute 12% of your base pay and dearness allowance to the Employee Provident Fund (EPF), a government-sponsored savings plan. The EPF interest rate is currently 8.25% annually, which makes it a wise long-term investment.
Let’s take a brief look at the advantages of keeping your EPF balance, nevertheless.
Retirement Savings
The ability to establish a retirement fund is one of the EPF’s biggest benefits. Every month, you set aside a part of your money to generate interest. This builds up over time, providing you with a sizeable sum that guarantees your financial security after you retire.
Emergency Financial Support
In hard times, an EPF balance serves as a safety net as well. You can partially withdraw the cash for certain purposes, such as a medical emergency, house loan repayment, further education, or marriage expenditures, even though you are not allowed to take out all of the money at once.
In this manner, you may avoid taking out high-interest loans and yet have cash on hand when you need it most.
Insurance Coverage
A lot of individuals don’t know that EPF offers life insurance under the Employees’ Deposit Linked Insurance (EDLI) programme.
A distribution is made to the nominee of an EPF account holder who dies while still working. This lessens the strain of an unexpected loss by guaranteeing the family receives financial support.
Tax Benefits
The EPF offers tax advantages as well. Section 80C of the Income Tax Act allows for the deduction of contributions, which lowers taxable income. An employee may remove up to Rs 1.5 lakh from their EPF contributions.
Stable Growth
Every year, the government determines and adjusts the EPF interest rate. With a rate of 8.25% for 2024–2025, your funds will rise steadily. Long-term financial independence and improved money management are thus made possible.
