What does GPF Stand for?
The full form of GPF is the “General Provident Fund”. It is a PF (provident fund) scheme that is only applicable to government employees and is subject to several tax benefits over time. Like a regular provident fund scheme, a government employee makes a set contribution to this fund every month from his/her salary. The fund invests this money, gains interest, and gives the interest back to the fund holders. This serves as an effective method of investment for retirement for government employees, as the money is only returned at the time of superannuation.
Eligibility Criteria for Participation in the General Provident Fund
- The individual should be an Indian citizen, working for the Government of India in any form, and the organization must be a part of the Central, State, or Union Governments.
- If the employee works on a salary level (and not on a daily wage basis/piece-rate basis), the GPF is mandatory. A portion of the salary is directly reduced by the government and put into this account.
- People employed as freelancers/part-timers and private sector employees are not eligible for the General Provident Fund Scheme. If you’re a private sector employee, and your employee does not provide EPF schemes, you can take a look at Public Provident Funds (PPFs). PPF is similar to the GPF, and it applies to all citizens of the country.
GPF Quick Facts
- Full-Form of GPF - General Provident Fund
- Acts as the ideal tool for government employees looking to invest and save money for their retirement. In addition to the contributions made by the employee, the employer can match the employee’s contribution, which acts as an additional incentive.
- The holder of the GPF account is required to elect a nominee of his/her choice at the time of creating a GPF account. Should something bad happen to the account holder (death, lunacy, insanity, etc.), the nominee will receive the benefits of the GPF.
- The balance accrued on the GPF account is returned to the employee at the time of retirement or superannuation.
- Additionally, GPFs offer a financial tool called GPF advance. Government employees can take an interest-free loan against their GPF at any time. This advance would not be subjected to tax, provided that the repayment is prompt. Any violations of the terms would be termed as premature withdrawal and would be liable for tax.
We hope this information was useful to you. Like the full form of GPF, you can learn from others our articles. This would be extremely beneficial for a banking exam.
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