An Employees’ Provident Fund (EPF) account is eligible for incomes EPF rate of interest until the account holder turns 58 years. But, the query is, will the EPF curiosity earned by the account holder will probably be 100 per cent revenue tax exempted in all situation? According to tax and funding consultants, an Employees’ Provident Fund Organisation (EPFO) subscribers’ revenue through EPF account is taxable if she or he is holding an inoperative account. They mentioned that an EPF account is eligible for tax-free curiosity accumulations solely when it’s operational. Once the EPF account turns into inoperative, the EPF account will proceed to earn curiosity however the curiosity collected within the EPF account will probably be taxable.
Speaking on when an EPF account grow to be inoperative Manikaran Singhal, Founder at goodmoneying.com mentioned, “An EPF account become inoperative if the monthly contribution in the account is not deposited for the period of three years and in that period EPF withdrawal claim is also not received by the EPFO. In short, if EPF contribution is not made in EPF account for three years and during this period if the EPF withdrawal is also not claimed, then the EPF account will continue to earn EPF interest but the EPF account will become inoperative.”
Under what circumstances an EPF account turns into inoperative SEBI registered tax and funding skilled Jitendra Solanki mentioned, “An EPF account become inoperative under certain circumstances that are — job loss or switching from job to entrepreneurship, in case the EPFO subscriber passes away or the EPFO subscriber migrates abroad.” He suggested EPFO subscribers to withdraw EPF stability moderately letting one’s EPF account grow to be inoperative. However, he mentioned that EPF withdrawal is advisable solely when the EPF account is greater than 5 yr outdated. If an EPFO subscriber withdraws EPF stability earlier than 5 years of the EPF account opening, then the quantity withdrawn will probably be taxable.
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