Here's How Your PF (Provident Fund) Investment Can Make You A Crorepati

The Employees' Provident Fund Organization (EPFO) allows salaried employees in the private sector to build a retirement corpus with regular investments. Employees' Provident Fund (EPF) investment remains one of the best options for salaried individuals to build a retirement fund. 

EPF investment up to Rs 1.5 lakh per annum qualifies for tax exemption under Section 80C of the Income Tax Act.

The maturity amount is also exempt from tax once an employee contributes for more than five years. However the government introduced a new per year PF contributions amount limit.

An individual who starts working at the age of 21 years with a basic monthly salary and DA (Dearness Allowance) of Rs 25,000 can retire with over Rs 1 crore from his regular contributions to the EPF investment.

Per the existing EPFO norms, the employee and employer contribute 12 per cent of the basic salary and dearness allowance (DA) each towards EPF. 

Deductions are made from the employee's salary every month, which helps build a corpus fund, which can be withdrawn on retirement.

From the employer's contribution, 8.33 per cent goes towards the Employee's Pension Scheme, and only 3.67% will go towards EPF investment. 

Partial withdrawal from EPF is allowed under a few circumstances, but it's advisable not to withdraw money from your EPF account.  

The government has fixed the interest rate on the Employees' Provident Fund at 8.1 per cent for the Financial Year 2022-23. If you never withdraw money from your EPF account at the current interest rate, you can retire with more than a crore in your provident fund.

An individual joining an organisation at the age of 21 with a basic monthly salary and DA (Dearness Allowance of Rs 25,000 can retire with over Rs 1 crore with his regular contributions to the EPF investment. 

If your retirement age is 60, you contribute to EPF investment for 39 years. At the current interest rate of 8.1 per cent, your retirement corpus will grow to over Rs 1.35 crore.

If your salary increases by an average of 5 per cent per annum, your retirement corpus can grow to Rs 2.54 crore. At an annual increment of 10 per cent in your salary, you can retire with an EPF corpus of over Rs 6 crore.

The EPF investment calculations depend on the basic salary, DA, and interest rates. The interest rate on EPF investment is revised from time to time by the government. 

The present calculation has been made on the current interest rate, and the retirement corpus would grow up to the estimated amount only if you don't make any partial withdrawal.