In the event of leaving the job, does interest continue to accrue in your EPF account? If there is any confusion about this, then understand what is the rule of EPFO.
Employees Provident Fund: What happens to the amount deposited in the EPF (Employee Provident Fund) account on leaving the job before retirement? Does it continue to earn tax-free interest? It is important to mention here that even after your retirement age, the interest rate on the EPF account continues to accrue. Then whether there is any new contribution in it or not.Also Read: SSY: The future of three daughters can also be safe, know how
In case of resignation from the job before the age of 58, if you do not withdraw your money within 36 months, then your Employee Provident Fund account becomes inactive. However, even if the EPF account is inactive or inoperative, interest is available on it.
Account becomes inoperative in 4 situations
- If the employee retires from the job after the age of 55 years.
- If the subscriber goes abroad.
- If the EPF member dies.
If after resigning from the job, he does not make the settlement within 36 months from the date of becoming eligible to withdraw money from PF. Also Read: LIC Policy: Deposit a premium of Rs 43 daily, earning Rs 3333 per month
Income Tax Rules on EPF
According to income tax rules, if the money is withdrawn before the completion of 5 years of continuous service, then the interest on the EPF balance is taxable. In a case where the employee worked in more than one organization for the first 5 years of EPF subscription, the service is considered regular. If he transfers the EPF balance of the previous institution to the existing institution. In this situation, the employee is considered to have put in continuous service of 5 years or more for tax purposes.