Employed people are changing jobs rapidly or they are losing their jobs. 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? After leaving the job, for how long does the interest on the deposit remain tax free? Let us know the answers to some such important and useful questions.
New Delhi. Many people working in the private sector leave one company and join a job in another company. In the current era, many people have lost their jobs and they have not been able to get any other job. Some people leave the job before the time of retirement. Under any such circumstances, you should 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 a certain time only. At the same time, the interest earned on it also gets converted into taxable income.
Till when will interest be available on 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 certain period of time. Explain that after leaving the job, if no contribution is deposited for the first 36 months, the EPF account is put in the category of Inoperative 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. 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 associate amount is not deposited. However, tax on interest income is charged on the interest received during this period. 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. Let us tell you that 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 at 55. 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.
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