What is GPF? Benefits of General Provident Fund

What is GPF and how does it work?

There are several types of provident funds and General Provident Fund is one of them. It can be called a saving tool for government employees. All through the years of the employment of government employees, a percentage of their salary is deducted to be contributed to the GPF account. When they retire, the GPF fund is provided to them, along with the interest amount that has been accumulated in all these years.

Features of General Provident Fund

Some of the features of the General Provident Fund are mentioned herein below:

• Government employees can start making GPF contributions from their salary
• While opening a GPF account, you have to make one of your family members a nominee. In your absence and behalf, the nominee will be able to withdraw the funds. He/she would not need any kind of documents to do that
• As the account holder or subscriber retires, instruction is issued on an immediate basis to release the accumulated money. There is no need of applying for the money from the account holder’s side
• If the account holder passes away, the nominee will get the funds along with the additional amount for the next three years. Nevertheless, the additional amount paid to the nominee is not more than INR 60,000.

As per the GPF contribution rules, the nominee will be provided the amount only if the account holder was in service for at least five years.

The interest rate of GPF

The interest rate of GPF is 7.1% at present. The Budget Division of the Department of Economic Affairs at the Ministry of Finance issues the notification of the interest rate of GPF, which is updated each quarter. An interest rate of 7.1% is applicable in various provident funds such as

• The General Provident Fund (Central Services)
• The State Railway Provident Fund
• The Contributory Provident Fund (India)
• The All India Services Provident Fund
• The General Provident Fund (Defence Services)
• The Indian Ordnance Department Provident Fund
• The Indian Naval Dockyard Workmen’s Provident Fund
• The Indian Ordnance Factories Workmen’s Provident Fund
• The Armed Forces Personnel Provident Fund
• The Defence Services Officers Provident Fund

Eligibility for General Provident Fund

To open a GPF account, an individual has to meet certain eligibility criteria. Here are a few of them mentioned below:

• The account holder has to be an Indian citizen and a government employee
• A government employee who belongs to a certain salary class can open a GPF account
• A certain percentage of the GPF deduction in salary is charged, which is at least 6% of the monthly salary.

Difference between GPF, EPF, and PPF

Parameters	EPF	PPF	GPF
Abbreviation	Employees’ Provident Fund	Public Provident Fund	General Provident Fund
Eligibility criteria	People working in any company that has 20 or more employees	Include all the Indian resident individuals	Only Government employees
Interest rates	8.5%	7.1%	7.1%
Maturity period	Up to 58 years of age	15 year period	Until retirement
Minimum Deposit range	10% or 12% of the salary or INR 1800	INR 500 per year	6% of their monthly salary
Maximum Deposit range	It is voluntary, no completion is made	INR 1.5 lakhs per year	100% of their monthly salary
Premature closure	Being unemployed for more than 2 months	Only after 5 years of maturity, for educational and medical purposes	If the individual quits their government job

Steps to open a GPF account

If you want to open a GPF account, here are some steps that you have to follow:

• The government employees can find a form of GPF fund which they have to fill up
• The application is then submitted to the Account General of the state
• Once it is approved, an account number is provided to the account holder/subscriber
• Once it is done, the deduction from the monthly salary of the subscriber is then specified. The amount that is deducted is made to the DDO (Drawing and Disbursing Officer).

After each financial year, the account holder/subscriber gets an annual statement of the GPF fund which include break ups such as debits (loan), credits, interest accumulated (7.1 % interest rate), and closing balance.