I resigned from my position in September 2017 and my last contribution to the Employees Provident Fund (EPFO) dates back to August 2017, at the age of 50. I joined another job in January 2018 and started contributing to the company’s PF trust. I have not withdrawn any money from EPFO so far. How long will I receive interest on money deposited with EPFO? How can I withdraw money from EPFO? Should I transfer the proceeds to the new company’s PF Trust? If my old company no longer exists and I am unemployed, how should I go about it?
It is assumed that you hold an Indian passport. In accordance with the provisions of the Employees Provident Fund (EPF) Scheme of 1952, no interest shall be credited to a member’s account from the date the account became an inoperative account.
Central Government empty Notification no. GSR 1065(E) of November 11, 2016 amended the 1952 EPF scheme, in which changes were made to the conditions leading to a provident fund account becoming an inoperative account. After the implementation of these provisions, an account becomes inoperative if no claim has been preferred by the member after reaching age 58 or the date of withdrawal, whichever comes first. Thus, you will continue to earn interest on the accumulations of EPF under the previous employer until you reach the age of 58.
In accordance with the provisions of the EPF scheme, after termination of employment a member may withdraw EPF accumulations from the fund if not employed, at any other establishment to which the provision of the Employees Provident Fund Act and the Miscellaneous Provisions (EPF), 1952, is applicable, within two months preceding the date on which the request for withdrawal is made. However, since you already started the new job in January 2018, you are not eligible for the withdrawal of the PF accrual and you can have the PF accruals transferred to the PF trust under the new employer.
If your old company no longer exists and you are also unemployed, you can request the withdrawal of the PF by submitting the withdrawal request online through your account on the UAN portal.
Further, from a taxation point of view, pursuant to Section 10(12) read together with Regulation 8 of Part A of the Fourth Schedule to the Income Tax (IT) Act 1961, the accumulated balance of the PF due and payable to the employee, i.e. the balance to his credit on the date of termination of his employment, is exempt from tax if he has rendered continuous service for a period five years or more. In the event of a change of employment and the accumulations of PF under the former employer are transferred to the new employer(s), the cumulative period of employment with all employers must be consulted in order to assess whether the employee has worked continuously. service for a period of five years or more.
Parizad Sirwalla is Partner and Head, Global Mobility Services, Tax, KPMG India.