Do you also withdraw money from Provident Fund i.e. PF after changing job? If you are doing this then you are playing with your future. Perhaps you have never calculated what would be the loss of withdrawing PF money after changing job? When you judge it, you will definitely regret it.
Actually, PF is a great way for working people to save and raise huge funds. A part of the basic salary of working people is deposited in the PF fund every month. The government pays interest on the deposited amount on annual basis. The government has fixed the interest rate at 8.15 percent for the current financial year.
Even those with a salary of Rs 15,000 will collect huge amount.
Now let us explain to you how withdrawing PF money causes big loss. Suppose someone’s salary is Rs 15 thousand per month. According to EPFO rules, Rs 2351 is deposited every month in the PF account of such an employee, in which both the employee and the employer contribute.
Now if we look at the current 8.15 percent interest, if Rs 2351 is deposited in the PF account every month, a total of Rs 4.34 lakh will be deposited in 10 years. Whereas after 20 years this amount will increase to Rs 14.11 lakh. At the time of retirement i.e. after 40 years, Rs 86 lakh more will be deposited in the PF account. But if you withdraw PF money as soon as you change job, your elephant will remain empty at the time of retirement. Therefore, it is beneficial for everyone to transfer PF money instead of withdrawing it while changing jobs. You can easily merge all PF accounts under one UAN. It is a very easy process.
This is the easy process to merge PF account…
- Log in to EPFO portal with your UAN number and password.
- After logging in, go to online services. There click on ‘One Member – One EPF Account (Transfer Request)’.
- Verify your personal details and PF account of current employer.
- After this, if you click on Get Details, the list of your old employers will open.
- Here, click on the account you want to transfer.
- After this click on Get OTP, OTP will come on your registered number, enter it and submit.
With a change of job, it is very easy to withdraw PF money instead of transferring it, but it causes huge loss in future. The biggest advantage of not withdrawing the PF amount is that both the employee and the employer get income tax exemption on PF contribution.
How much is the deduction?
12 percent is deducted from an employee’s salary for the EPF account. Of the deduction made by the employer in the employee’s salary, 8.33 percent goes to the EPS (Employee Pension Scheme), while 3.67 percent goes to the EPF. You can check the current balance of your PF account in easy ways sitting at home. Many options have been given for this.
Advice on withdrawing money after retirement
It is generally better to take PF Account as a retirement plan. Experts also advise that money should be withdrawn from Provident Fund only after retirement. This is because you get a huge lump sum amount, which helps you in any kind of financial problem. However, sometimes situations become such that you have to withdraw money from your PF account to meet your needs. In some cases, tax also has to be paid on withdrawals made from PF.
Tax on withdrawal before 5 years
According to EPFO rules, if it has been more than five years since your PF account was opened and you want to withdraw some amount from your deposit, then in such a case you do not have to pay any tax. Whereas if your account has not been opened for five years, then tax will be deducted on the amount withdrawn by you. However, this tax is deducted like TDS. EPFO has set rules for this deduction also. According to this, if the PAN card of the PF subscriber is linked to his account, then 10 percent TDS is deducted, whereas if it is not linked, 20 percent TDS is deducted.
