Union Budget 2024: According to CNBC Awaz, Finance Minister Nirmala Sitharaman may announce a Rs 25,000 increase in the existing Provident Fund (PF) ceiling. The current restriction of Rs 15,000 went into force after the pay threshold for coverage was increased about a decade ago, in September 2014. According to the report, the Ministry of Labour and Employment has created an appropriate plan. The budget is expected to be unveiled later this month.
What is the Provident Fund?
The Provident Fund is a government initiative designed to provide social security to employees. The Employees' Provident Fund (EPF) Scheme, 1952 states that an employee of a specific covered Establishments (with monthly pay of up to Rs 15,000) are required to join the fund and donate 12% of their wages, which comprise basic wages, dearness allowance, and retention allowance, if applicable.
Similarly, the employer is required to contribute 12% of salary to the fund. The fund is overseen by a board of trustees that includes representatives from the federal and state governments, companies, and employees. Employees earning more than Rs 15,000 are not required to contribute to PF. However, if the present threshold is raised to Rs 25,000 in the 2019 budget, the new set of employees covered by the plan may experience some adjustments in their financial freedom.
What are the benefits of the Provident Fund?
The employees Enrolled in this program can withdraw the collected assets for a variety of purposes, including purchasing or building a home, paying medical or educational expenditures, and covering marriage-related fees. Since the epidemic, the scheme's terms have also let employees to withdraw cash for Covid-19-related expenses. Employees that save PF over time will receive a yearly interest credit on their savings, which contributes to their long-term financial security.
What happens to operational PF accounts?
The Centre explains that certain accounts that become inoperative have specific claimants. Individuals or entities with a well-established right to benefits and compensation are referred to as "definite claimants." The entire sum in inoperative accounts as of March 2022 was Rs 4962.70 crore, according to the Centre. Since the pandemic, the scheme's terms allow employees to withdraw funds for Covid-19-related expenses. Employees that save Provident Fund over time will receive a yearly interest credit on their savings, which contributes to their long-term financial security.
What happens to operational PF accounts?
The Centre explains that certain accounts that become inoperative have specific claimants. Individuals or entities with a well-established right to benefits and compensation are referred to as "definite claimants." The entire sum in inoperative accounts as of March 2022 was Rs 4962.70 crore, according to the Centre.
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