April 26, 2023

GPF Rules (General Provident Fund Deposit) 2023 - Withdrawal & Nomination

GPF rules

Retirement planning constitutes an integral part of financial planning. Planning for retirement does not only ensure that your funds get sorted post-retirement but also ensures you fulfill your dreams, such as travelling around the world.
Though the government of India backs several schemes, Public Provident Fund (PPF), General Provident Fund(GPF) and Employees' Provident Fund(EPF) are the widely known ones.
Today, we are going to focus on the General Provident Fund and its various rules you must know before subscribing to the scheme.
In this blog, we will cover the following:
  • What is a GPF?
  • Eligibility rule for GPF
  • Nomination rule for GPF
  • Deposit rule for GPF
  • GPF interest rules
  • GPF rules for withdrawals
  • GPF advance rules
  • GPF taxation rules

What is a General Provident Fund?

A General Provident Fund(GPF) is a fund specifically designed to plan for retirement for government employees.
Like all other schemes or funds, a certain sum amount or percentage of salary is deducted and contributed towards the fund. Post-retirement, the accumulated funds are reimbursed to retired employees.

What are GPF rules?

The government of India has enforced specific rules regarding the various aspects of the saving scheme to make sure everything is clear. Let's learn about the various rules of the scheme.

Eligibility criteria for GPF

Generally, only government employees are eligible for the scheme. However, anyone who fulfils the below-mentioned criteria(s) is eligible to contribute towards the fund.
  • All temporary government employees who have performed their service for a year or more.
  • All permanent government employees who are residents of India
  • All re-employed pensioners (other than those eligible for admission to the Contributory Provident Fund)
Not eligible: Private sector employees are not eligible to contribute towards the scheme. They can opt for PPF schemes instead.

Nomination rule

Subscribers to the fund can declare a nominee at the time of subscribing to the fund. The nomination rule elaborates that the nominee should be a subscriber's family member.
In case of more than one nominee, subscribers shall specify the share payable to each nominee.

GPF rules: Deposits

In GPF, there are certain rules for how a subscriber can make deposits towards the fund. Let's have a look at them.
Minimum amount: Subscribers to the fund need to contribute at least 6% of their total income.
Maximum amount: Subscribers to the fund are not allowed to contribute any amount exceeding their total income.
Frequency of contribution: Monthly contributions need to be made except during the period an employee is under suspension.

GPF interest rate rules

GPF interest rules cover the interest aspect of the saving scheme. The government of India fixes the interest on amounts credited (or GPF balance). The government sets an interest rate for every quarter.
For the quarter from 01 January 2023 to 31 March 2023, the interest rate was 7.1% per annum.

GPF withdrawals rules

GPF rules for withdrawal are different under different circumstances. Let's have a look at each one of them.

Primary criteria

As per GPF rules, individuals wanting to withdraw their funds must have completed at least ten years of service in their field.
  • For education, marriage, or to fund dependents/family members' needs, you can withdraw up to 75% of the outstanding balance in the PF account
  • In case of medical crises for yourself or your family members, subscribers can withdraw up to 90% of their PF account balance. The amount will be made available within seven days.
  • If you want to finance a house, purchase land to construct a house, renovate your home, reconstruct ancestral property, or repay a home loan, you can withdraw up to 75% of the balance in the PF account.
  • You can also withdraw funds if you wish to buy a vehicle, repair it or repay a car loan. If you are planning to specifically buy a vehicle, the maximum you can withdraw is either three-fourths of the vehicle value or 75% of the PF balance, whichever is lower.
  • You can also withdraw funds to buy home appliances such as air conditioners and washing machines. The only condition is you have to use funds for the purpose you mentioned and not otherwise.
  • Without giving any solid reason, you can withdraw up to 90% of your funds or the balance amount before two years of retirement.
  • If the subscriber dies, the nominee is eligible to redeem the outstanding amount in the PF account. If the subscriber to the fund has been performing his service for at least five years, the nominee is eligible for an additional amount as well. This amount can be calculated as the average of 3 years of PF balance preceding the event of death. The amount must not exceed ₹60,000.
  • The subscriber is eligible for 100% of the PF balance at retirement or superannuation.

GPF advance rules

GPF subscribers are eligible to get three months of advance pay or half of the PF account balance, whichever is lower.
Subscribers are eligible for advance for various purposes such as funding education, marriage, medical emergencies, buying ACs, and washing machines, and fulfilling the expenses of legal proceedings against you or members.
The advance needs to be paid back within 12 - 24 months in equal installments. The loan tenure can be up to 36 months if the advance payment exceeds three months' pay.

GPF taxation rules

Many government employees prefer saving their funds towards GPF because of the tax benefits. Monthly contributions, accrued interest and returns from the PF account are exempted from taxation under the Section 80C.

Conclusion

Planning for retirement is crucial and should be addressed at any cost. The general provident fund allows salaried individuals across various government sectors to prepare for their retirement.
In this blog, we talked about eligibility rules, nomination rules, deposit rules, interest rules, GPF rules for withdrawals, advance rules and taxation rules.
Being a government employee, you should be aware of these rules so that you don't break them unintentionally.

Never miss a trading opportunity with Margin Trading Facility

Enjoy 2X leverage on over 900+ stocks

Upstox Margin Trading Facility
Apple Logo
Downloadlogo
iOS App
Google Play Logo
Downloadlogo
Android App

RELATED ARTICLES

How to Withdraw EPF Amount Online Via Mobile & Online Process

The Employee Provident Fund is one of the best savings instruments which can be used to make long-term investments. The amount deposited in the EPF account helps employees secure their financial position. It is a social security net managed by the government on behalf of the employees. It is compulsory for you to open an account in EPF Department (EPFO) when you join the organisation of your choice. This move helps you save for your retirement and emergencies at a young age. It is possible to carry out PF withdrawal online. You must follow certain PF withdrawal procedures from the previous employers and the EPFOs (Employee provident fund organisations). The withdrawal of funds would be accorded only after following proper legal processes. EPF, or Employee Provident Fund, is an investment scheme that offers financial security to its participants. It was started in the year 1952 as a social security scheme for the workers of the unorganised sector. Moreover, EPF provides a wide range of services like health insurance, life insurance, etc. Here is how to withdraw EPF online and manage it better.

Digital Seva Portal - CSC, Login, Registration, & Scheme

Common Service Centre, or the CSC, is a digital platform that helps people with zero or limited internet access to perform various functions and avail of several services. You can also obtain certificates or government documents from this platform. You can get access to these services by paying a small amount and bypassing the method of visiting authorities, standing in long queues, and making offline payments. This platform makes the functioning of common individuals extremely quick, error-free, accessible, and cost-effective. The CSC platforms also allow individuals who are Indian citizens and above the age of 18 to apply for various government programs. Individuals can open a Common Service centre or Sewa Kendra, and every village or town has a CSC centre. You can register online for the Digital Seva CSC Portal, which includes registering as a VLE - Village Level Entrepreneur.

NPS Vs PPF - Which is Better & Difference

Retirement can be the best or worst time of your life, depending on how well-prepared you are for it. On the one hand, you will have enough time on your hands to do whatever you want to do, without having to worry about work. On the other hand, you no longer have a regular income from work, which may mean not having the necessary money to meet all of your requirements. Add to that inflation and increasing life expectancy, which can continue for a long time. This is why retirement planning is so important. Unless you are eligible for a pension when you stop working (and sometimes even if you are), you will have to invest in retirement schemes to live out your golden years comfortably without stress. That’s why the government of India has made retirement savings possible through specific schemes they offer. The two most essential schemes among these are the [Public Provident Fund](https://upstox.com/saving-schemes/public-provident-fund-ppf-interest-rate/) or PPF and the National Pension Scheme or NPS. Moreover, these schemes come with tax benefits that make them more attractive to citizens. They are covered under Section 80C of the Income Tax Act, meaning you can claim a tax benefit of up to INR 1.5 lakhs by investing in either product. However, that’s where the similarity ends. They are very different in terms of tenure, returns, lock-in periods, and maturity amount usage. This article will explain the features of both these schemes and their similarities and differences in more detail.

NPS (Nation Pension Scheme) Interest Rates 2023

Proper retirement planning goes a long way to improving life after retirement. Financial security in your old age can be a lifesaver. With all of the inflation, healthcare and other costs will only go up in the future, and if you do not have a solid retirement plan, things can get complicated in your old age. Retirement can seem like a long way away for people in their 20s and 30s, who are probably in the beginning stages of their careers. However, starting early makes retirement planning a lot easier. After all, the best time to have started planning for your retirement was yesterday, and the next best time to do it is now. You can start by investing in a retirement plan or pension scheme, and there are many of both offered by various financial companies. One such scheme offered by the government of India that you can invest in is the National Pension Scheme or NPS.