Employees' Provident Fund Organisation (EPFO) gives the facility of provident fund to all employees. For this, a small deduction is made from salaries of the employees. This is done to secure their future after retirement. However, there are several other benefits that provident fund account holders are entitled to and very few people are aware about it. We will understand some of these benefits.
Free Insurance facility
As soon as your provident fund account is opened, you get insurance by default. You get an insurance of Rs 6 lakhs under Employees Deposit Linked Insurance (EDLI). A nominee or legal heir of an active member of EPFO gets a lump sum payment of up to ₹ 6 Lakhs in case of death of the member during the service period. This benefit is provided by companies and central government to their employees.
Employees’ Provident Fund is the easiest and best option to save money in tax. EPF account holders can save 12% in taxes on their salary under Section 80 C of the Income Tax. This benefit has been discontinued in the new taxation system; however, you can avail this benefit by opting for old tax system for computing your tax.
Pension benefit post retirement
Under EPFO ACT 1976, 12 percent of employees’ basic salary and dearness allowance (DA) is deposited in provident fund account. Similarly, companies also contribute 12% of basic salary and dearness allowance, of which 3,67% goes in the employees’ account and remaining 8.33% in Employees' Pension Scheme