PF Accounts: Merging PF accounts is an essential step for every employed person. It not only protects your money but also avoids tax-related complications. Merging at the right time and making wise withdrawals can strengthen your retirement fund.
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PF Accounts: Changing jobs is common these days, but a major problem arises: the creation of two PF accounts. When an employee joins a new company, a new PF account is opened for them, while the old account remains active. This results in the employee having two or more PF accounts. If these are not merged in time, this could lead to future withdrawal and tax related problems.
Why is PF account merging necessary?
Merging PF accounts keeps your entire balance safe in one place and ensures continuous interest benefits. If the accounts remain separate, it can lead to difficulties in interest calculation and withdrawal. Furthermore, merging is beneficial in terms of tax regulations.
Process of PF Account Merger
– Every employee is given a UAN (Universal Account Number), which is permanent.
– It is mandatory to update KYC by visiting the EPFO portal.
– After this, the balance of the old account is transferred to the new account by filling out Form 13.
– After the merger, the old account becomes empty but remains in the records.
Tax rules: When is PF withdrawal tax-free?
– If the employee has served for 5 years or more, PF withdrawal is completely tax-free.
– However, if the service period is less than 5 years and the employee withdraws PF, TDS and income tax may be levied on it.
– If the accounts are not merged and withdrawals are made from different accounts, the tax burden may increase further.
Important advice for employees
– A new PF account is created upon changing jobs, so start the merger process immediately.
– This process can be easily completed through the EPFO website or mobile app.
– Try not to withdraw PF before 5 years to avoid tax.
– Merging will keep your money safe and strengthen your retirement fund.
Merging PF accounts is a crucial step for every employed person. It not only keeps your money safe but also avoids tax-related complications. Merging at the right time and withdrawing wisely can strengthen your retirement fund.
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