GPF, short for General Provident Fund, is a type of PPF (Public Provident Fund) account that is available only for government employees in India. With a GPF account, all the government employees can contribute a certain percentage of their salary to the General Provident Fund. The total amount that is accumulated throughout the employment term is paid to the employee at the time of retirement.
Interest rates on GPF are revised periodically according to the government’s issued notifications. As per the GPF rules, the following are eligible to subscribe to GPF account:
- All temporary government servants who have given their service for continuously one year
- All re-employed pensioners (except those eligible for admission to the contributory provident fund)
- All permanent government servants
Key Features of GPF
- GPF is managed by the Department of Pension and Pensioner’s Welfare under the Ministry of Personnel, Public Grievances and Pensions.
- A government employee can become a GPF member by contributing a certain percentage of his/her salary to the same, according to pensioners’ official portal, i.e. pensionersportal.gov.in.
- GPF provides an interest rate of 7.1% at present
- A monthly subscription is required to GPF except during the period when the subscriber is under suspension.
- According to pensionersportal.gov.in, subscriptions to the general provident fund are stopped three months prior to the date of superannuation
- Immediate payment of the final balance is done upon the retirement of a subscriber.
- A subscriber is required to make a nomination in the name of a family member, at the time of joining the fund, in the prescribed form. The nomination grants the right to one or more persons to receive the accumulated credit in the fund in the event of the subscriber’s demise.
- There is no need to submit an application by the subscriber for the final payment from the fund.
- As per the GPF rules, the person is entitled to receive the amount standing to the credit of the subscriber on the death of a subscriber, shall be paid an additional amount equal to the average balance in the account during the three years immediately preceding the death of the subscriber, however, it is subject to certain conditions provided in the relevant rule.
- The additional amount that is payable under that rule should not exceed Rs 60,000. Furthermore, to avail of this benefit, the subscriber should be in service for at least 5 years at the time of his/her death.
How to Open a GPF Account?
A GPF account can be opened fast. Furthermore, the GPF account is managed by the AG office (Accountant General) of the appropriate state, or by the Central government in the case of Central government personnel.
Following that, one must complete an appropriate form and submit it to the Account General of the particular state. In turn, they will assign an account number. They also specify a monthly deduction from employees’ salaries to be made to the DDO (Drawing and Disbursing Officer) of that establishment. Furthermore, at the end of the fiscal year, an employee receives a statement of credits and debits (on account of the loan) and a closing balance, including interest accumulated.
GPF Contribution Amount
The amount for GPF subscription is fixed by the subscriber only. However, the contribution rate should not be less than 6% of the total salary of the employee. The maximum contribution can be 100% of the employee’s salary.
GPF Advances
- GPF has certain provisions for refundable advances from the accumulated fund under various predefined grounds which include education, medical emergency, marriage, and for getting a house or consumer durables.
- The GPF subscriber is eligible to get either up to 12 months of pay or three-fourths of the GPF balance, whichever is less. However, the sanctioning authority can allow a 90% withdrawal of the balance under some special circumstances.
- The sanctioning authority must sanction and credit the qualified advance within fifteen days from the date request. There is no need for any sort of documentary proof to be furnished by the subscriber in order to raise a claim for GPF advance. The amount borrowed has to be repaid. It can be repaid in a maximum of 60 months installments.
- It should be noted no interest is charged on the GPF advance and the account holder can make multiple claims for GPF advances throughout his career. Even if you are already repaying an existing GPF advance, you can make a request for a fresh advance.
- However, the condition here is, if the advance is granted before the complete repayment of your existing advance, the outstanding amount of the same will be added to the new advance and installments for recovery refixed with reference to the consolidated amount.
Maturity and Withdrawal Process of GPF
- The maturity of the GPF account happens at the time of retirement/superannuation of the respective government employee.
- An employee can withdraw his accumulated GPF funds on various grounds but the only mandatory condition is completing 10 years of service or within 10 years before the date of retirement on superannuation, whichever is earlier. This applies if the employee has not left the government service.
- In case an employee quits the job at any stage, he becomes eligible to withdraw his GPF balance irrespective of his service tenure.
- Finally, in the event of the subscriber’s demise, the GPF amount will be paid to his/her nominee