EPFO Withdrawal Rules – Salaried people are changing jobs fast nowadays. In such a situation, the big question is what happens to their Employee Provident Fund Account (EPF Account)? For how long does interest continue to accrue on the EPF account and for how long does the interest on deposits remain tax free?
New Delhi. People working in the private sector often change jobs. Even at this time, recruitments are going on in every sector. In such a situation, many people are joining jobs in new companies. If you are also doing this, then do not be careless about your Employee Provident Fund (EPF), otherwise you may have to bear a double loss. Actually, after leaving the job, if you do not do any transaction in your EPF account, then it remains active for some time only. At the same time, the interest earned on the deposit after the specified period on the account without transaction is converted into taxable income.
Till when will the interest be paid on the inactive EPF account?
Most of the people who leave the job feel that interest will continue to accrue on the amount deposited in their PF account and the capital will continue to grow. Actually, this happens only for a fixed period. Explain that after leaving the job, if no contribution amount is deposited for the first 36 months, the EPF account is put in the category of In-Operative Account. In such a situation, you should withdraw some amount before 3 years to keep your account active.
Till when PF account will not be deactivated?
Under the existing rules, if the employee retires at the age of 55 and does not apply for withdrawal of the deposit within 36 months, then the PF account will become inactive. Understand in simple words, even after leaving the company, interest will continue to accrue on the PF account and will not become inactive till the age of 55 years.
When will the interest earned on PF amount be taxed?
According to the rules, the PF account does not become inactive if the contribution amount is not deposited. However, the interest earned during this period is subject to tax (Tax on Interest Income). If the PF account is not claimed even after being inactive for 7 years, then the amount goes to the Senior Citizens Welfare Fund (SCWF). Explain that the trusts which are exempted through section 17 of the EPF and MP Act, 1952 also come under the purview of the rules of Senior Citizens Welfare Fund. They also have to transfer the account amount to the welfare fund.
Till when can I claim transfer amount in welfare fund?
The unclaimed amount transferred to the PF account remains in the Senior Citizens Welfare Fund for 25 years. During this, the PF account holder can claim the amount.
There is no benefit of leaving your PF amount with the old company. Actually, the interest earned during the period of non-working is taxable. Don’t let the account become inactive if you retire in 55 years. Withdraw the final balance as soon as possible. PF account will not become inactive till the age of 55 years. Still it is good to transfer PF balance from old institution to new institution. This will raise a good amount on retirement.
