scorecardresearchGPF interest rate unchanged for June quarter: All you need to know about

GPF interest rate unchanged for June quarter: All you need to know about it

Updated: 17 Apr 2023, 03:46 PM IST
TL;DR.

The government provident fund is a government-backed saving scheme that provides financial security to its employees during their retirement years. It offers attractive tax benefits, a reasonable rate of return and the flexibility to withdraw money at any time.

The government provident fund is a government-backed saving scheme that provides financial security to its employees during their retirement years.

The government provident fund is a government-backed saving scheme that provides financial security to its employees during their retirement years.

The Ministry of Finance has recently announced the interest rate for the general provident fund (GPF) for the April-June quarter of 2023, much to the disappointment of many investors. Despite a significant increase in the interest rates of select small savings schemes, effective from April 1, 2023, the interest rate for GPF and other similar provident fund schemes has remained unchanged.

“It is announced for general information that during the year 2023-2024, accumulations at the credit of subscribers to the general provident fund and other similar funds shall carry interest at the rate of 7.1 percent (Seven points one percent) w.e.f. 1st April, 2023 to 30th June, 2023,” the ministry said in an official note.

What is GPF?

Government provident fund is a long-term retirement savings scheme designed primarily for government and public sector employees in India. It is a voluntary savings scheme that allows employees to save a portion of their salary each month and earn a steady return.

GPF contributions are deducted from the salary of the employee each month and deposited into the employee's GPF account. The money accumulates in the GPF account and earns interest at a rate determined by the government. It is a voluntary scheme, meaning employees can choose to opt in or opt out of the scheme at any time.

What are the primary features of GPF?

From eligibility criteria to withdrawal conditions, let us go through the features of GPF one by one.

Interest rates

The GPF interest rate is set by the central government and is revised periodically. Currently, the interest rate is 7.1% per annum. This rate is applicable to all existing GPF accounts and any new accounts opened. The rate of interest is credited to the GPF accounts on a quarterly basis.

Contribution

The GPF requires that all government employees contribute a minimum of 6% of their salary each month. This subscription is deducted from their salary and deposited into their GPF account. However, once the total contribution for the current financial year reaches Rs. 5 lakh, the contribution can be stopped.

Tax benefits

The GPF is a long-term savings scheme that provides a steady and safe income during retirement years. It is a tax-free scheme and withdrawals from the account are also tax-free. The amount subscribed to the account is eligible for tax rebate under section 80C of the income tax act.

Eligibility

The GPF account can be opened by any government employee who is a permanent employee of the central government, state government, union territories or autonomous bodies. Temporary employees who have served continuously for more than a year are also eligible. However, the government employee who have joined after 2004 cannot be a part.

Withdrawal

Withdrawals from the GPF account can be made after a government employee has served for 15 years or is within 10 years of retirement. The maximum withdrawal amount is set at 6 months' pay or half of the balance amount in the GPF account, whichever is lower.

This limit can be increased to 75% of the GPF balance amount if the authority allows it, depending on the status, needs and GPF balance of the subscriber.

The government provident fund is a government-backed saving scheme that provides financial security to its employees during their retirement years. It offers attractive tax benefits, a reasonable rate of return and the flexibility to withdraw money at any time.

 

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It is recommended to first allocate money to savings every month before spending.  
First Published: 17 Apr 2023, 03:42 PM IST