Is voluntry contribution Investment In Provident Fund Good Or Bad?
Administrator 01-09-2017 01-12-2017
This gives you an opportunity to accumulate your corpus for retirement with hedge to inflation. It helps you in maintaining the purchasing power of your money for at least 25 to 35 years of your life.
This product is long term in nature and you can invest up to 12% of your (basic salary+D.A), this gives you return of approximately 8.5%.
The best part about this scheme is that you have similar contribution from your employer, which enables you to make 100% return in total on your contribution.
Investment up to 1.5 lac per annum qualifies for the deduction of income under section 80C of the Income tax Act. The maturity proceeds or partial withdrawals from the scheme are Tax free in the hands of individuals, excluding people who contribute in unrecognized provident fund.
So individuals should enquire about the status of their PF trust..
PF withdrawal before 5 years of employment is taxable.
You need to contribute the mandatory deduction in PF. Only certain Government and other employees have the option to invest more in Provident Fund. Like other products you need to plan carefully as it gives you hedge against inflation only. If you don’t find any instrument to generate returns more than inflation, you should invest in this. Investment without knowing your need you can have short corpus or you may have very high surplus corpus by unnecessarily sacrificing your other needs. This is good for people who are not disciplined enough to invest regularly or who cannot avoid premature withdrawals.