If you are employed, then every month a part of your salary goes to the Employees Provident Fund (EPF). This money is deposited to make life secure after retirement. But many people withdraw money from EPF from time to time, considering their needs. Doing this may seem beneficial for some time, but in the long run, it can prove to be a lost cause.

Why is it important to save EPF money?

The biggest advantage of EPF is the compound interest it receives. The longer your money remains in EPF, the more interest you will get. For the financial year 2024-25, an interest of 8.25% has been fixed on EPF, which is completely risk-free.

But when you withdraw money repeatedly, the interest you get gradually decreases. That is, the more often you withdraw money, the more you weaken your retirement fund.

Tax exemption is also available on EPF.
The interest received from EPF is completely tax-free, but there is a condition for this. If you deposit money in EPF continuously for five years and do not withdraw it, then it remains tax-free.

If you withdraw money before the completion of five years, then tax can be levied on the withdrawn amount. The amount you withdraw is added to your annual income, and tax has to be paid on it.

Keep an emergency fund separate.
Many people withdraw EPF money after losing a job or in an emergency. But the better option for this is to create a separate emergency fund. This will fulfill your needs, and the EPF fund will also remain safe.

Keeping the PF account active is beneficial.
If you change jobs and close the PF account, then a new PF account has to be created in the next job. This can make it difficult to track and transfer the old funds. Therefore, it would be better if you keep your PF account only one and keep it active. The money deposited in it will keep earning interest without interruption.

This money will be useful after retirement.
The real purpose of EPF is that you have a strong fund when your income stops. In the era of rising inflation, it is very important to have savings for retirement. So avoid withdrawing EPF frequently. Save it till retirement, because at that time this money will be most useful to you.

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