Most lost their jobs during the Corona crisis. In such a scenario, the question arises as to what will happen to their Employees Provident Fund Account (EPF Account).
New Delhi, Corona lockdown has brought financial transactions to a standstill. The company had made many decisions like cost cutting in this difficult situation. In the meantime, millions of employees lost their jobs. Some employees left their previous job and started working for another company. If you are one of such people, this news is important for you. Many people forget to transfer Employees Provident Fund (EPF) after leaving their job. So let’s find out what happens to your PF account and the amount in it after leaving the job.
Most of the job seekers are satisfied even though they are not investing in their PF account but the interest accrued increases the amount deposited in their account. For this you need to know that the PF account of the employees is categorized as In-Operative Account as there is no contribution in the first 36
In that case you have to withdraw some amount within three years to keep your account active. Under the current rules, if an employee retires at the age of 55 and does not apply for withdrawal within 36 months, his PF account will be inactive. Simply put, the PF account continues to earn interest even after leaving the company and the account does not become inactive for 55 years.
Interest on PF is taxable –
As a rule, PF account is not deactivated if contribution is not made. But the interest earned in the meantime is taxed (Tax on Interest Income). If the claim is not made even after the PF account is deactivated, the amount goes to the Senior Citizens Welfare Fund (SCWF). If the amount remained inactive for seven years in the PF account is not claimed, it is transferred to this fund. Trusts exempt under Section 17 of the EPF and MP Act 1952 also fall under the purview of the rules of the Senior Citizen Welfare Fund. They also have to transfer money from their account to the Welfare Fund.
You can claim up to 25 years on the amount transferred to the Welfare Fund
The amount transferred to the PF account and not claimed remains in the Senior Citizen Welfare Fund for 25 years. In the meantime, the PF account holder can claim this amount. Leaving your PF amount in an old company is of no particular benefit as interest earned during the period of non-employment is taxable.
If you are retiring at the age of 55, do not let your account become inactive. Remove the remaining amount as soon as possible. PF account does not become inactive till you reach the age of 55 years. However, it is better to transfer the amount in the PF account from the old institution to the new institution. So a lot of money is accumulated until retirement.