Answer #1

By definition, a Provident Fund is a kind of financial support that is composed mainly of an individual’s salary contributions or investments made during the time of his/her employment which is given back to the person who made the contribution as a form of retirement benefit.

The main goal for developing a Provident Fund is to grant economic security and stability to an individual when the person retires from his/her work. Such assistance is offered in India. Provident Funds also have different types with the likes of Employees Provident Fund (or simply EPF) and Public Provident Fund (or PPF).

On one hand, Employees Provident Fund is a kind of fund specifically designed for individuals who is working for a company or simply an employee. It works under the implementation of the Employees Provident Fund Organization of India or EPFO. A company who has at least 20 or more employees is required to register itself with the inclusion of EPFO. According to Indian Labor Law, 12% of the individual’s basic salary, cash value of provided food allowance, and DA should be contributed to the employee’s EPF account. And in case the employee works to another company (for whatever reason there is), his/her EPF account are also reassigned to the new company where he currently works.

Public Provident Fund, on the other hand, is a kind of Provident Fund that is open for all. It is designed to cater anybody who wishes to save for their future especially self-employed individuals with the likes of business men, freelancers, engineers, lawyers, or doctors just to name a few.

The system works under the management of State Bank of India and is supported by the India Post. Payment procedure through PPF is similar to placing a bank deposit only the payment is made in an assigned post office. Every member of PPF is provided with a passbook. Members should always bring along their passbook whenever they make transactions for records purposes.

Answered By: khristine [216 ]