GPF Interest Rate

GPF, also known as the General Provident Fund, is a specially designed provident fund account for government employees of India. It is the savings instrument for various government employees in the country. It works the same as PPF or public provident fund, which provides reliable saving scheme options to individuals.
 

The Ministry of Finance modifies the GPF interest rates from time to time. Under the GPF scheme, government employees must invest a part of their salary into a GPF account, which they can withdraw at retirement or for an emergency.

Here in this blog, we will discuss the GPF scheme and its current interest rate.

What Is GPF or General Provident Fund?

A general provident fund or GPF is the retirement or savings scheme employed by the government of India to help all the government employees in the country. All government employees can participate in this saving scheme irrespective of their sector and level by contributing a part of their salary to a GPF account every month.
 

The program was initiated to provide financial security to individuals in emergencies or upon retirement. One of the significant benefits of using the GPF scheme is that the government backs it, so the chances of risks are less. Further, under Section 80 of ITA, the GPF allows employees to save their tax^* liability while saving funds for retirement.

What is the GPF Interest Rate?

The GPF interest rate is decided by the Department of Pension and Pensioners' Welfare. They update the GPF interest rates that align with the country's financial condition. It means the interest rates of GPF are in accordance with the nation's financial needs.
 

All government employees receive the same interest in GPF contributions irrespective of their sector or level of employment. For the fiscal year 2022-23, the current GPF interest rate is 7.1%. The rate of interest in GPF accounts changes from time to time, but the scheme continues to be a secure and viable option for government employees.

However, government employees are advised to remain updated about the GPF interest rates to make informed decisions.

List of GPF Interest Rate (Year-Wise)

Keeping an eye on the past year's GPF Interest Rate will help in analysing the pattern of interest provided by the authorities. Below is the list of year-on-year GPF interest rates for your better understanding:
 

How Does GPF Work

The GPF scheme involves government employees contributing a portion of their monthly salary to their GPF account until the end of services. Upon the completion of service or at the time of retirement, this accumulated amount will be transferred to the employee by the employer. Not just this, employees can use funds from the GPF account at the time of emergency, too.
 

Further, GPF schemes offer flexibility to employees with respect to contributions they make in GPF accounts. The minimum contribution government employees can make is 6% of their subscriber salary. While the maximum deposit can be 100% of the subscriber's salary. Due to this flexibility, it is accessible for all income groups. However, employees are required to contribute every month except during the suspension period.

Important Features Of GPF

Some of the essential features of GPF are as follows:
 

• Management of the Scheme -The Department of Pension and Pensioner's Welfare manages the general provident fund scheme.
• Membership in the GPF - The government employees who want to join the GPF scheme must contribute a portion of their salary to a GPF account.
• Final Payment - Upon the completion of service, an employee can receive the total amount without providing any additional document.
• Nomination - One of the features of a GPF account is to provide a nominee at the time of opening of account. If something happens to an employee, the nominee can withdraw the amount.
• Death Benefit - As per the General Provident Fund rules, the nominee will get the additional amount in the event of the employee’s demise. The amount is equal to the average of the GPF account balance over 3 years prior to the employee's death.
  However, the additional amount should not exceed the value of ₹60,000. Moreover, employees must have completed 5 years of services to avail of this benefit. This provision is enforced to help employees who have been in service for long so that nominees receive adequate amounts during difficult times.
• Tax Benefits - Government employees who invest in GPF schemes can also take tax benefits under Section 80C of the Income Tax Act.

Eligibility Criteria for General Provident Fund

    There are the following eligibility criteria to enrol in General Provident Fund schemes:
 

• The eligible employees should be citizens of India.
• The employees who have completed one year of service in the public sector, including temporary government employees such as probationers and apprentices, are eligible to contribute to the GPF account.
• Re-employed pensioners are also eligible for the GPF saving scheme. However, those eligible for the Contributory Provident Fund cannot invest in GPF.
• Further, government employees must deposit a portion of their salary in a GPF account every month without delay except for the suspension period.
• Those who have deputation outside India are not eligible for a GPF account.

How to Open a GPF Account?

• To open a GPF account, employees need to fill out the application form and submit it to authorities with the required documents, such as bank details, PAN card, appointment letter, etc., to their employer.
• Once the employer checks and verifies the documents, the GPF account will be opened.
• The employee will receive a GPF account number given by the account general.
• Once the account is activated, a fixed percentage of salary will be deducted and deposited in the GPF account on a monthly basis.
   

To monitor and track the GPF balance and  transactions, employees can visit the finance department of their office.

Conclusion

Undoubtedly, GPF is an excellent long-term investment plan for government employees of India. Not only this, but the interest rate in GPF accounts is also competitive. Besides this, the investment plan offers various benefits such as tax savings, guaranteed¹ returns, etc., making it a secure option for government employees to have financial security at retirement. To diversify your investment portfolio, you can invest in multiple savings schemes and stay stress free about meeting your financial goals.