Provident Fund Scheme

1) Public Provident Fund Scheme

  PPF is one of the most attractive investment avenues available in India. Individuals and Hindu Undivided Families (HUFs) can participate in this scheme. Only one account can be opened in the name of a person. A PPF account may be opened at any branch of the State Bank of India and any other office authorized by the Central.

2) Employee Provident Fund Scheme (EPF)

 A major vehicle of saving for salaried employees is the Employee Provident Fund Scheme. Each employee has a separate provident fund account in which both the employer and employee are required to contribute a certain minimum amount on a monthly basis. Employee can choose to contribute additional amounts, subject to certain restrictions. While the contribution made by the employer is fully tax exempt (from the point of view of the employee), the contribution made by the employee can be deducted before computing the taxable income under section 80 C of Income Tax Act, 1961. An EPF account carries a compound interest rate of 9.5% p.a. that is totally exempt from income tax. Also, the balance in an EPF account is completely exempted from wealth tax.

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