The GPF or General Provident Fund is an investment scheme for government employees in India. It requires all government employees to contribute a certain percentage of their salary to the General Provident Fund (GPF). You can withdraw funds from a GPF account for specific purposes like medical expenses, education, or retirement.
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GPF full form is the General Provident Fund. It is a savings pension plan introduced in 1960 for government employees in India. It allows employees to contribute a portion of their salary to the fund, which earns interest.
The accumulated amount, along with GPF interest rate, is payable at the time of retirement or as specified. GPF aims to provide financial security and support to government employees post-retirement.
The key features of the GPF pension plan are mentioned in the following table:
| Feature | Details |
| GPF Interest Rate | 7.1% p.a. |
| GPF Contributions |
|
| Subscription Fee | Monthly subscription fee is required, except during suspension periods. |
| Subscription Halt Before Superannuation | Subscriptions are stopped 3 months before superannuation, as per the Government of India pension portal. |
| Final Payment Application | No application is required for final payment from the fund upon retirement. |
| Withdrawals | Partial withdrawals allowed:
|
| GPF Loans | Available for various purposes like house, education, and medical expenses |
| Nomination for Death Benefit | You must nominate a family member during GPF account registration for death benefit. |
| Death Benefit Calculation | Nominees receive an additional payment equal to the average balance over 3 years, up to a Rs. 60,000. |
| Eligibility for Death Benefit | You must be actively working for at least 5 years to be eligible for death benefit. |
| Management Entity | Department of Pension and Pensioner’s Welfare under the Ministry of Personnel of the Government of India. |
| Tax Benefits | Deductions on contributions, interest, and maturity amount, as per the Section 80C of the Income Tax Act, 1961. |
The GPF interest rate for the fourth quarter of 2023-2024 (January-March) is 7.1% p.a., which is announced by the Ministry of Finance of the Government of India. The GPF interest rate is reviewed and revised quarterly by the government.
NOTE:
It is important to note that the GPF interest rate is different from the EPF interest rate.
The EPF interest rate for the entire Financial Year (FY) 2023-24 is set at 8.25% p.a.
You can contribute to the General Provident Fund Account if you fulfil the below-mentioned criteria:
Open to central government and specific state government employees.
Employees must not have chosen any other government or organizational provident fund scheme.
Temporary employees with one year of continuous service qualify for GPF.
Compulsory for government employees in specific salary classes.
Government employees need to contribute a specified percentage of their salary to join GPF.
Ineligible for employees on deputation outside India.
Excluded for employees in private sector companies.
| You may also compare: Saral Pension Yojana |
You can understand the working of the General Provident Fund (GPF) from the steps mentioned below:
If you are a government employee in India, you need to join the GPF. You have to inform your employer of your desire to contribute.
You can contribute between 6% and 100% of your basic salary each month. Your fund grows faster as you contribute more.
Your chosen amount is automatically deducted from your salary every month and deposited into your GPF account.
Your GPF account earns interest at a rate fixed by the government. Currently, the GPF interest rate is 7.10% p.a. in January 2024. This interest gets added to your balance every year.
Your GPF balance gradually gets accumulated over time, with regular contributions and interest.
You can access your GPF funds upon retirement or after completing ten years of service (whichever comes later).
You can choose to withdraw the entire amount as a lump sum or take monthly payments in instalments upon maturity.
You can also make partial withdrawals before retirement for specific purposes like medical expenses, children's education, or house purchase.
Follow these steps to open a General Provident Fund (GPF) Account:
Step 1: Contact your department's Drawing and Disbursing Officer (DDO). Inquire about the GPF account opening process and required documents.
Step 2: Obtain the "Account Opening Form" (usually provided by the DDO or Accountant General's office).
Step 3: Provide details like name, designation, date of joining, and chosen contribution percentage (6% or 10% of basic salary).
Step 4: Your DDO verifies the form and forwards it to the Accountant General's office (AG) along with relevant documents. The AG assigns a unique GPF account number.
Step 5: You will receive your GPF account number and General Provident Fund login details.
Your chosen contribution percentage will be automatically deducted from your salary each month and credited to your GPF account.
As per the General Provident Fund Rules, 1960 for the Central Services, the minimum contribution to a GPF account is 6% of the basic salary, while the maximum contribution is 100% of the basic salary. However, some state governments and public sector organizations may have different minimum and maximum limits.
Within the minimum and maximum limits, you can choose how much you want to contribute to your GPF account.
NOTE: There is not a centralized system to check your General Provident Fund (GPF) balance in India. The process for General Provident Fund balance check typically involves the website of your state's Accountant General (AG).
The General Provident Fund (GPF) in India allows you to avail advances for various purposes under the following specific conditions:
Any subscriber with a minimum of 5 years of service can apply for an advance.
The advance amount depends on various factors like your salary, balance in the GPF account, and purpose of the advance.
You can get up to 12 months' pay or three-fourths of the GPF balance, whichever is less.
In special circumstances, a 90% withdrawal is possible with sanctioning authority approval.
You can get an advance for these purposes-
Illness of yourself or a dependent family member
Expenses for the higher education of children or spouse
Meeting wedding expenses of self or dependent children
Sanctioning authority must approve and credit the advance within 15 days of the request.
No documentary proof is needed to raise a claim for GPF advance.
Amount borrowed must be repaid, with a maximum repayment period of 60 months in instalments.
No interest is charged on GPF advances.
Multiple claims for GPF advances are allowed throughout the subscriber's career.
Even if repaying an existing advance, a request for a new advance can be made.
If an advance is granted before complete repayment of an existing one, the outstanding amount is added to the new advance.
Instalments for recovery are refixed based on the consolidated amount.
The maturity of your General Provident Fund (GPF) Account and the withdrawal process from this account is mentioned below:
GPF matures upon your retirement or when you reach superannuation age.
Withdrawal is allowed after ten years of service or with ten years left until superannuation, applicable for continuous government service.
Resignation allows immediate withdrawal of GPF balance, irrespective of service tenure.
Post maturity, you can either withdraw the full balance or choose a monthly pension.
In the event of your demise, the GPF balance is paid to the nominee or legal heir.
NOTE: GPF withdrawal rules for state govt employees are similar to those for central government employees.
The following table shows the difference between different pension plans, like the General Provident Fund (GPF) Scheme, National Pension Scheme (NPS), and the Public Provident Fund (PPF) Scheme:
| Feature | General Provident Fund (GPF) | Public Provident Fund (PPF) | National Pension Scheme (NPS) |
| Who can join? | Only government employees in India (before Jan 2004) | Any Indian citizens (18+) | All Indian residents (18-70 years) |
| Mandatory or Optional? | Mandatory | Optional | Optional |
| Contribution | By government - employee | Self-contribution only |
|
| Minimum contribution | 6% of basic salary | ₹500 per year | ₹1,000 per year |
| Maximum contribution | 10% of basic salary | ₹1.5 lakh per year | No limit |
| Tax benefit | Deductible under 80C | Deductible under 80C | Deductible under 80C, additional ₹50,000 under 80CCD(1b) |
| Interest rate | Set by government, currently 7.1% | Set by government, currently 7.1% | 9% to 12% p.a.* (Market-linked) |
| Maturity period | Retirement | 15 years, extendable by 5 years | 60 years |
| Premature withdrawal | Allowed only on leaving government service | Allowed after 5 years for specific reasons (medical, education) |
|
| Overall | Secure, guaranteed returns, limited access | Flexible, tax-friendly, good for long-term savings | Potentially higher returns, higher risk, long lock-in, more flexibility |
* It is advisable to use an NPS Calculator to estimate your returns from investments in the National Pension Scheme.
The General Provident Fund (GPF) serves as an important financial instrument for government employees. This pension plan facilitates systematic savings and ensures financial security during retirement. This employee-contributory scheme has proven to be a reliable means of long-term wealth accumulation while emphasizing fiscal discipline. With its structured approach, the GPF stands as a cornerstone in promoting financial stability and well-being among government personnel.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
*All savings are provided by the insurer as per the IRDAI approved insurance
plan.
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
+Returns Since Inception of LIC Growth Fund
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.
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