New Rules for Withdrawal from Provident Fund

The norms for withdrawal of General Provident Fund (GPF) have been relaxed which will enable employees to receive payments within 15 days.

Employees can also withdraw the fund for select purposes after completing 10 years of service, as against 15 years of service earlier.

 The provisions in the rules have been reviewed and it has now been decided to permit withdrawals from the fund by the subscriber for obligatory expenses viz. betrothal (engagement), marriage, funerals, or other ceremonies of self or family members and dependants, besides illness of self, family members or dependants.

It has been decided to permit withdrawal of up to twelve months pay or three-fourth of the amount standing at credit, whichever is less. For illness, the withdrawal may be allowed up to 90 per cent of the amount standing at credit of the subscriber. A subscriber may seek withdrawal after completion of ten years of service.

The GPF can be withdrawn for purchase of consumer durables also. Existing rules do not give any time limit or sanction and payment of withdrawal amount.

The GPF can be taken for education — including primary, secondary and higher education, covering all streams and institutions. Earlier, a subscriber could withdraw GPF for beyond the high school stage.

Therefore, it has been decided to prescribe a maximum time limit of fifteen days for sanction and payment of withdrawal from the fund. In case of emergencies like illness etc., the time limit maybe restricted to seven days.

Provident fund is a savings scheme that is available in India and many other countries. The provident fund account is run by the government for the citizens of India. The fund acts a saving investment tool that will reap benefits at maturity. In a typical provident fund account, the customer will invest a part of their salary in the account for a certain period of time consistently and avail the fund amount when it attains maturity. It usually acts as a retirement savings plan.

There are several provident fund accounts available in India, each with different features and benefits. Listed below are the popular operational provident fund accounts available in India.

1. Employee Provident Fund Account
2. Public Provident Fund Account
3. General Provident Fund Account

GPF or General Provident Fund account is a provident fund account which is available for government employees. A government employee can become a member of the fund by contributing a certain percentage of their salary to the account. The accumulations in the fund is paid to the government employee at the time of superannuation or retirement.

Any government employee who is a resident of India is eligible for the General Provident Fund account. The account is mandatory for a certain salary class employed with the government. Employees working with private companies are not eligible for the account.

How does GPF Work?

General Provident Fund is a savings tool for individuals employed with the government in India. In the account, the account holder contributes a part of their salary into the account in regular instalments for a certain period of time. The money from the fund will be given to the employee when they retire or at the time of superannuation. The account holder can nominate a nominee at the time of opening the account. The nominee will receive the benefits from the account if anything should happen to the account holder.

GPF has a feature known as GPF advance which is an interest free loan from the general provident fund savings. The amount borrowed should be paid back in regular monthly instalments. No interest will be paid on the GPF cash advance taken. One can take as many GPF advances as needed in their career.

Public Provident Fund is a savings cum tax savings account offered in India. It was introduced by National Savings Institute of Ministry of Finance in 1968. The fund offers reasonable returns along with income tax benefits. The account holder should deposit a minimum of Rs.500 is in order to open and maintain PPF account and the maximum that can be deposited is Rs.1.5 lakh. A deposit more than Rs. 1.50 lakh p.a. will not earn any interest and will be not be eligible for any rebate under income tax.

Any resident of India is eligible for the account. Only one PPF account can be opened and maintained per individual except for accounts that are opened on behalf of minors. Non-Resident Indians (NRIs) are not eligible for a PPF account. Hindu Undivided Family individuals are not eligible for a PPF account.

How does PPF work?

Public Provident Fund is an account that acts as a saving account along with acting as a tax saving instrument. The provident fund account can be opened any of selected branches and subsidiaries of designated nationalised banks and selected post office branches. It is a 15 years scheme and the account matures only after 15 years. There is no room for premature withdrawal with PPF. In case of death of the account holder, the nominee will be given the amount from the fund. The interest received on the account is completely tax free.

Difference between GPF and PPF?

GPF is available only for government employees while PPF is available for the self-employed and other income sectors of the society. While one can avail loans with GPF (GPF advance), there is no loan granted on PPF and premature withdrawals are not allowed. PPF account attains maturity 15 years while GPF attains maturity at superannuation or at maturity.