General Provident Fund
The government has increased the rate of interest for General Provident Fund (GPF) and other related schemes by 0.4 percentage points to 8 per cent for the October-December quarter.
The rate is in line with that for Public Provident Fund and would be applicable on funds of the Central government employees, defence forces and Indian railways. The interest rate on GPF was 7.6 per cent for the July-September quarter of 2018-19. “… during the year 2018-2019, accumulations at the credit of subscribers to the General Provident Fund and other similar funds shall carry interest at the rate of 8 per cent with effect from October 1, 2018, to December 31, 2018,” a Department of Economic Affairs’ notification said.
The interest rate would apply on Provident Funds of central government employees, railways and defence forces. Last month, the government announced that the interest on small savings, including NSC and PPF, will be hiked by up to 0.4 percentage point for the October-December quarter, to align it with rising deposit rates in the banks.
What is GPF?
GPF or General Provident Fund account is a provident fund account which is available for government employees. A government employee can become a member of the fund by contributing a certain percentage of their salary to the account. The accumulations in the fund are paid to the government employee at the time of superannuation or retirement.
Any government employee who is a resident of India is eligible for the General Provident Fund account. The account is mandatory for a certain salary class employed with the government. Employees working with private companies are not eligible for the account.
How does GPF Work?
General Provident Fund is a savings tool for individuals employed with the government in India. In the account, the account holder contributes a part of their salary into the account in regular instalments for a certain period of time. The money from the fund will be given to the employee when they retire or at the time of superannuation. The account holder can nominate a nominee at the time of opening the account. The nominee will receive the benefits from the account if anything should happen to the account holder.
GPF has a feature known as GPF advance which is an interest-free loan from the general provident fund savings. The amount borrowed should be paid back in regular monthly instalments. No interest will be paid on the GPF cash advance taken. One can take as many GPF advances as needed in their career.