The full form of GPF is General Provident Fund. It’s a way to help Indian government workers with their money needs. This idea started in 1960, and the government takes care of it. Both the workers and the government put money into it. The main idea is to give a dependable money source after these workers retire from their jobs.
When workers get old enough to stop working or finish their job time, they can take out the money they saved. Also, the GPF gives some extra money every few months. This helps government workers make more money. This special thing makes it interesting for people who want a safe way to save money for when they’re old and to stay safe when surprising things happen.
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How GPF Works?
Here’s how the GPF operates:
- When employees join a company, they’re required to open a GPF account. A portion of their salary, usually a percentage of their basic pay, is deducted each month and added to their GPF account.
- Currently, the standard GPF deduction is 6% of the employee’s basic income, with a minimum of INR 500 per month.
- These rates might vary based on the rules of different government bodies.
- Employees have the option to increase their GPF deductions if they want.
- The money saved in the GPF account earns interest, a rate determined by the government annually.
- Employees can also borrow money from their GPF account under specific circumstances.
- If employees switch to another government agency or leave their job, they can either withdraw or transfer their GPF balance to their new employer.
How to Open a GPF Account?
Employees must submit an application form to their employer, together with copies of required papers such as an appointment letter, PAN card, and bank passbook, in order to open a GPF account.
The employee’s GPF account is opened once the application is approved by the firm. Following that, a defined percentage of the employee’s income is deducted and placed into the GPF account on a monthly basis (typically 6% of their basic pay). Employees can track their GPF balances and transactions by contacting their employer’s finance department.
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