Provident Fund (PF) is especially thought of as a retirement-oriented funding choice, which is necessary for an worker. According to the Employees’ Provident Fund Organisation (EPFO) norms, it’s higher to switch one’s PF or Employees’ Provident Fund (EPF) account to the brand new recruiter. However, because of the lack of Universal Account Number or UAN and PF account quantity and a few formalities required for switch of the EPF account, it has been discovered that staff do not switch their earlier EPF account to the brand new workplace. In that case, in response to consultants, the previous EPF account continues to earn EPF rate of interest (at the moment 8.5 per cent) however because of the non-contribution within the account the curiosity earned within the EPF account turns into taxable. It additionally hits the continuity of the PF contribution which will lastly dent the pension advantage of the EPF account holder.
Speaking on what occurs when an worker do not switch its PF account after altering job Mumbai-based tax and funding professional Balwant Jain mentioned, “If an employee don’t transfer its EPF account after changing job, the interest rate earned in the account becomes taxable from the month when monthly credit of PF contribution stops. In the new EPFO norms, the EPF contribution in the left EPF account will continue to incur EPF interest three years after 58 years of the EPF account holder but the PF income will become taxable.”
Advising EPF account holders to switch their PF after altering job SEBI registered tax and funding professional Jitendra Solanki mentioned, “If an employee fails to transfer its EPF account after changing job, then he or she will be losing the continuity of one’s EPF account too. EPFO gives pension benefit to the EPFO subscribers under EPS Scheme that requires at least 15 years of continuous contribution in the EPF account. So, even if the person has not transferred one’s EPF account at the time of job switch, one should do that by linking that EPF account with the new UAN. It will help the employee to maintain continuity of the EPF account.”
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