GPF Rules

When it comes to retirement, an individual’s financial preparedness should take precedence above any other matter. To that end, individuals have recourse to three government-endorsed instruments, which allow individuals to save for their life after retirement. It includes the Public Provident Fund (PPF), Employee’s Provident Fund (EPF), and the General Provident Fund (GPF). 

As it stands, the rules of these three saving instruments differ. Resultantly, the benefits they offer to subscribers also vary. Hence, it is highly essential to learn the GPF rules in detail for making an informed decision regarding whether it is ideal for one’s financial objectives or not.

What is General Provident Fund (GPF)

General Provident Fund allows individuals to deposit a sum of money periodically in their accounts until retirement. 

An employer then releases the accumulated amount, along with accrued interest, to the individual’s account on the date of retirement or superannuation. GPF withdrawal rules also allow individuals to utilise the accumulated sum prior to their retirement, subject to certain conditions. 

What are GPF Rules

When it comes to the General Provident Fund rules, there can be several classifications based on each aspect or feature of this savings instrument. These are – 

1) Eligibility Rules

One of the primary sets of rules concerns this PF’s eligibility. These are listed in the pointers below –

  • Any permanent government employee who is an Indian resident can subscribe to GPF.
  • All temporary government employees with an employment record of 1 year or more are eligible for GPF.
  • Government employees working in organisations functional under the EPF Act, 1952 can also reap this PF’s benefits. 
  • Any retired government pensioner who has been re-employed and is not eligible for the Contributory Provident Fund can also subscribe to GPF. 

As per GPF rules, it is exclusive to government employees. This is unlike other PFs, which are open to individuals employed in the private sector as well. 

2) Deposit Rules

As is characteristic of other PFs, the General Provident Fund also features set stipulations on the deposit amount and frequency. These have been discussed in the table below. 

Minimum Amount  The amount that a subscriber contributes shall not be less than 6% of his/her total income. 
Maximum Amount A subscriber cannot contribute any amount that exceeds his/her total income. 
Frequency Individuals shall make a deposit every month. But, it does not apply when such a subscriber is suspended.  
Maturity Date The PF matures at the date of one’s retirement or superannuation. However, contributions continue until 3 months before retirement as per GPF rules. 

3) Nomination Rules

Individuals can declare a nominee when first subscribing to the General Provident Fund. As per the rules, the nominee should be a family member. 

Subscribers may also declare more than one nominee. In that case, he/she should also specify the share of each nominated entity. It is also possible to appoint a minor when he/she reaches the majority age, i.e. 18 years. 

4) GPF Withdrawal Rules

Perhaps the most pertinent of all is the GPF withdrawal rules. The primary criterion here is that individuals must complete at least 10 years of service before being eligible to withdraw from their GPF. Prior to 2017, this limit was set at 15 years. 

The following points discuss the latest GPF withdrawal rules for govt employees surrounding-

  • A subscriber can withdraw an amount equal to 75% of the outstanding balance in such PF or his/her 12 months’ emoluments, whichever is lower. It is available for purposes of funding education or any ceremony, such as the marriage of self or a dependant family member. 
  • Individuals can withdraw up to 90% of the outstanding balance in case of illness of self or a dependent family member. According to new GPF withdrawal rules, the amount can be availed within 7 days for such purposes. 
  • Subscribers can finance purchasing a house, buying land for the construction of a house, repaying an existing home loan, reconstructing or renovating a home, or repairing the ancestral house by means of GPF withdrawal. The amount is capped at 90% of the outstanding balance in the General PF.
  • Subscribers can withdraw money from their GPF accounts for the purchase of a motor car, motorcycle, etc., repayment of loan taken for it, extensive repairs/overhauling of the motor car, depositing to book a motor car/motorcycle/scooter, moped, etc. A subscriber may be allowed to withdraw 75% of the outstanding amount or cost of the vehicle, whichever is less for these purposes.
  • Individuals may choose to withdraw 90% of the balance amount in their GPF without providing any cause prior to 2 years from retirement. This privilege was earlier reserved 1 year before retirement.

  • According to GPF rules, individuals can also withdraw from their accounts to purchase consumer durables, like washing machines, air conditioners, etc. Nonetheless, it is necessary to utilise the withdrawn amount only for the stated purpose.

  • Aside from premature withdrawals, the outstanding amount can also be released in the event of a subscriber’s death. The nominee is also entitled to an additional amount, which is equal to the average of 3 years of PF balance preceding such event. However, such an additional amount cannot exceed Rs 60,000.

  • As per GPF part final withdrawal rules, the subscriber should have been in service for 5 years or more for such additional benefits.

  • Apart from these, subscribers are entitled to the full amount upon retirement or superannuation.

5) GPF Interest Rate Rules

The GPF balance earns interest throughout. The Central Government revises such rates from time to time. For the recent quarter, GPF interest rate had been set at 7.1%. 

6) Taxation Rules

The General Provident Fund is one of the most lucrative savings instruments for its tax benefits. The contributions made, interest accrued, and returns received are tax-exempt under Section 80C of the ITA, 1961.

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