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

PF Withdrawal Form & How to Withdraw - Online, Login, Rules, & Process

The term PF withdrawal form, which stands for Provident Fund Withdrawal Form, refers to a form that enables interested people to access funds that have accumulated in accounts linked to EPFO (Employees’ Provident Fund Organization) schemes and programs. The Employees’ Provident Fund Organization (EPFO) is recognized as a non-constitutional organization that encourages workers to save money for retirement. The organization, established in 1951, is overseen by India's concerned ministries and legal authorities. The organization’s programs cover domestic and foreign workers (from nations with which the EPFO has formed bilateral arrangements).

National Pension Scheme (NPS) India 2023: Login, Registrations, Meaning, & benefits

The Government of India launched the National Pension Scheme for all government employees who joined after April 1, 2004, since it did not want to pay them defined benefits. While it was initially meant for Government employees, all citizens of India between the ages of 18 and 65 became eligible for the scheme in 2009. The goal of this scheme was to cover all Indian citizens, including those working in the unorganized sector. The [Pension Fund Regulatory and Development Authority](https://upstox.com/saving-schemes/pension-fund-regulatory-and-development-authority-pfrda/), or PFRDA, is the body that regulates and administers NPS. The Act governing the National Pension Scheme is the PFRDA Act 2013. This is a voluntary defined contribution pension system. Professional fund managers manage the funds that are invested in market-linked instruments. Individual subscribers contribute to the fund that keeps accumulating till retirement age. The investments under the NPS Scheme keep growing at market-linked rates depending on the fund chosen. There is an exit option for subscribers before reaching the superannuation age. The subscriber cannot withdraw the entire funds; a portion of the funds is used to provide the subscriber with a monthly pension. An annuity policy is purchased with a minimum of 40% of the corpus accumulated under the NPS scheme for providing a lifetime pension to the subscriber. The remaining 60% can be commuted or claimed as a lump sum by the subscriber.

EPF Balance India & How to Check it Online via Mobile Number & SMS

It is no secret that the Employee Provident Fund, or EPF, plays an extremely important role in an employee's financial life. It acts like an effective retirement fund supported by equal monthly contributions from the employee and the company. To keep track of the long-term contributions from both parties, a digital [EPF member passbook](https://upstox.com/saving-schemes/epfo-passbook-download/) is usually made available to every employee who is an EPFO member, wherein the EPF balance placed into the account is shown. Employee Provident Fund (EPF) contributions generally comprise 12% of an employee's gross income plus a matching amount from the employer. While taxes are not applied to the employer's EPF contribution, the employee can benefit from a tax deduction for contributions made to the EPF under Section 80C of the Income Tax Act. In other words, from an employee's perspective, payments to the EPF, interest that accrues on the PF balance, and withdrawals of money after the requisite specified duration (5 years) are all completely tax-free. When the employees retire, they get a tax-free lump payment from the Employee Provident Fund, which, as expected, includes the full contribution from both the company and the employee (EPFO), wherein the organisation determines the fixed annual interest rate. When calculating the interest accrued to the EPF account, the account's balance comes into play. While the annual percentage rate used to compute interest is 8.75%, every year on April 1st, the interest is computed on the total amount in the EPF account. All employees must be aware that although EPF withdrawals occur regularly, interest is determined annually. Therefore, it becomes much more important to regularly conduct your PF Balance check, especially at the start of the year.

What is Form 15G & How to Fill Form 15G for PF Withdrawal

Have you or someone from your immediate family invested in a fixed deposit, provident funds, or similar financial investment schemes? If yes, Form 15G is something you should know of. Form 15G is to be filled out by fixed deposit holders (who can be individuals under the age of 60 years or Hindu Undivided Family) to ensure that no TDS (Tax Deduction at Source) is subtracted from the interest income in a year. As per recent income tax regulations, it is mandatory for all banks and financial institutions to deduct tax at sources for any interest earned on financial instruments like [fixed deposits (FD)](https://upstox.com/banking/what-is-fixed-deposit-fd-interest-rates-benefits-account-opening-process/), recurring deposits, provident funds, or others. In keeping with this rule, the Employees’ Provident Fund Organization (EPFO) united portal launched a facility to submit Employee Provident Fund (EPF) Form 15G for PF online. This enables EPF members to withdraw their PF online and avoid TDS deductions on their investments.