There may be an announcement about PF in the budget this time.
In the Union Budget for 2024-25, Finance Minister Nirmala Sitharaman may announce an increase in the existing provident fund limit to Rs 25,000. About a decade ago i.e. in September 2014, the PF limit was revised to Rs 15,000. According to media reports, now the Ministry of Labour and Employment has prepared a proposal to increase it. This time the Finance Minister will present her seventh budget on July 23. Nirmala Sitharaman will be the first Finance Minister in the country who will create a record by presenting the budget 7 times consecutively.
What is the Pension Fund?
Provident Fund is a government scheme which aims at providing social security to employees. According to the Employees Provident Fund (EPF) Scheme, 1952, if the salary of a person in any organization is Rs 15,000 per month, then a provident fund will be provided to that employee. They will have to contribute 12 per cent of their salary which includes basic pay, dearness allowance and retention allowance etc. Similarly, the employer will also have to contribute 12 per cent of the salary to the fund. The fund is managed by a Board of Directors comprising representatives of the central and state governments, employers and employees.
The PF option is voluntary for employees with a salary above Rs 15,000. However, if the current limit is increased to Rs 25,000 in the next budget, new employees might see some changes in the flexibility they have to manage their finances under the scheme.
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What are the benefits of the pension fund?
Employees enrolled in this scheme can withdraw the accumulated money for various purposes such as buying or building a house, meeting medical or educational expenses as well as marriage-related expenses. Since the pandemic, many employees have withdrawn money from their PF to meet Covid-19 related expenses. Also, there has been a lot of relaxation in this by the government. Over time, those who deposit PF also earn annual interest on their savings, which also benefits employees a lot in the long run.
What happens to inoperative PF accounts?
According to the Centre, some accounts that remain dormant have definite claimants. ‘Definite claimants’ are persons or entities who have a defined right to claim benefits and compensation. The Centre had said that the total amount in dormant accounts till March 2022 is Rs 4,962.70 crore.
