EPFO Definition
EPFO is a key component of employee benefits in India, administered by the Employees’ Provident Fund Organisation (EPFO). This fund is a retirement savings scheme aimed at providing financial security to employees during their old age. Employers and employees both contribute a percentage of the employee’s salary to the EPFO Provident Fund on a monthly basis.
How Does EPFO Works?
Employees have a certain percentage of their salary deducted every month, which is contributed towards their EPFO Provident Fund account. The employer also contributes an equal amount to this fund. These contributions accumulate over the years, earning interest, and can be withdrawn by the employee upon retirement, resignation, or in case of certain emergencies. The EPFO Provident Fund serves as a long-term savings tool for employees, ensuring financial stability post-retirement.
EPFO Key Features:
1. Contribution: Both the employer and the employee contribute a certain percentage of the employee’s salary to the EPFO Provident Fund.
2. Interest: The contributions made towards the fund earn interest, which helps in growing the retirement corpus.
3. Withdrawal: Employees can withdraw from their EPFO Provident Fund account in case of retirement, resignation, or certain emergencies.
4. Tax Benefits: Contributions towards EPFO Provident Fund are eligible for tax benefits under Section 80C of the Income Tax Act.