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

Pradhan Mantri Awas Yojna (PMAY) Urban 2023: Scheme & Eligibility

Pradhan Mantri Awas Yojna Urban, abbreviated as PMAY-U, is a flagship program of the Indian Government. The Ministry of Housing and Urban Affairs (MoHUA) administers this program under the prominent leadership of Prime Minister Narendra Modi. The program was first launched on 25th June 2015 with the sole mission of addressing urban housing issues in the country. The project aimed at providing all-weather pucca houses to urban Middle-Income Groups (MIG) and Economically Weaker Sections (EWA)/Lower Income Groups (LIG) by the year 2022. The scheme applies to all the urban areas in India, including Notified Planning/ Development Areas and all statutory towns as of the Census of 2011. The Government of India sanctioned a 2,03,427 crores budget to develop 123 lakh houses in the urban area. As of August 2022, 62 lakhs houses have been completed, while 40 lakh houses are under construction. The Government further received proposals from the States/UTs for 40 lakh houses during the last 2 years of the scheme, owing to which the project timeline has been extended till 31st December 2024.

Pension Fund Regulatory and Development Authority (PFRDA) - Full Form & Login

Life as a senior citizen is hard enough without the added trouble of a lack of financial security. Aging often reduces your value at the workplace since your body and mind slow down as you grow older. Bad health is almost guaranteed as you age with the lifestyles people live these days. Add to that the extremely high cost of health care these days, and you can be assured that you will struggle to survive without a regular income, which you won’t have when you retire. That’s why it is so important to have a solid retirement plan in place. The best way to do this is to invest in retirement and pension schemes while still working. Most governments also have pension schemes available to their employees and, more often than not, the general working public. In India, the British had already installed a pension system that was followed until recently. In 1999, the central government recognized that the old system might not work anymore. To examine this issue, it commissioned a project titled Old Age Social and Income Security, or OASIS. The project was to look at the policy related to old age income security in India and develop ideas to improve it. According to the suggestions in the report given by the OASIS, the government of India came up with a new Defined Contribution Pension system which replaced the old Defined Benefit Pension System that was in place. This new pension scheme eventually came to be called the [National Pension Scheme](https://upstox.com/saving-schemes/nps-national-pension-scheme-india/) or NPS. Later, in August 2003, a new regulatory body called PFRDA was also established to regulate and develop the pension sector in India.

EPF Interest Rate 2023 & How to Calculate it Online

EPF (Employee Provident Fund) is a savings-retirement scheme devised for salaried employees under the Employees Provident Fund and Miscellaneous Act of 1952. The management of this provident fund is overseen by the Employees’ Provident Fund Organization or EPFO. In this policy, the employee and the employer contribute monthly. Every monthly installment is added to the EPF corpus till the retirement of an individual, and the interest is accrued at a stipulated rate on these deposits. Upon retirement, this EPF corpus encompasses the monthly contributions of the employee and the employer, including the interest generated over the years. The fund collected can also be withdrawn in certain situations as decreed by EPFO, like during unemployment. Thus, the scheme of EPF has been designed to act as a financial safety net for when an employee does not get a monthly paycheck.

Credit Linked Subsidy Scheme (CLSS) 2023 - Status & Meaning

Prime Minister Narendra Modi unveiled the Pradhan Mantri Awas Yojana project in 2015. By 2022, the Indian government hopes to offer cheap housing to the country's poor urban population. The Credit Linked Subsidy Scheme (CLSS), which aims to make housing accessible for everyone, is a key component of this program, which goes by the slogan "Housing for all." It also provides a subsidy for survey-driven independent house construction or repair. The only program that will be executed as a central sector scheme among the four emphasis areas stated above is CLSS. The remaining plans will be carried out as sponsored plans. The Government of India wants to increase the flow of credit into institutions through the Credit Linked Subsidy Scheme to help our nation's urban poor population with their housing demands. Two central nodal organizations in India, Housing Urban Development Corp and National Housing Bank will administer the Credit Linked Subsidy Scheme. This program will concentrate on the demand components of the affordable housing financing segment and increase the credit flow necessary to meet housing demands. Economically Weaker Groups or Low-Income Groups seeking home loans from financial institutions and banks involved in the Pradhan Mantri Awas Yojana Scheme may take advantage of the benefits under the CLSS. For residential development or to add a room to an existing home, borrowers may qualify for credit-linked subsidies. The female head of the household must be listed as the registered owner of any homes built or acquired using benefits from the Pradhan Mantri Awas Yojana program. The beneficiaries can choose to register it under both the male and female family heads' names. In unique circumstances where there is not a female head of household, the home Additionally, it must be the beneficiary's first home. The beneficiary family should not have a brick house in any region of India in their name or the name of any relative.