EPFO Login | Many salaried employees have an Employees’ Provident Fund (EPF) account in which they essentially contribute 12% of their basic salary every month. Apart from this, the interest received on it up to a certain limit is tax free. At the same time, the maturity amount is also tax free with certain conditions. […]
EPFO Login | Many salaried employees have an Employees’ Provident Fund (EPF) account in which they essentially contribute 12% of their basic salary every month. Apart from this, the interest received on it up to a certain limit is tax free. At the same time, the maturity amount is also tax free with certain conditions.
Many people do not understand the nuances of the EPF scheme. For example, how long can you keep money in the EPF account after retirement or after leaving the job? Does this mean there will be no monthly contributions to the account? If there is no monthly contribution, will the EPF account balance continue to earn interest?
If so, by when will it be received and what will be the interest rate applicable on such EPF balance? If you continue to work in the same or different company even after retirement, can you continue to contribute to the EPF and EPS account? Here is information about some points of the EPF account, which the contributing member should know.
The EPF account remains active when a person continues to make monthly contributions from salary. However, if you have quit working or have retired, it is important to know how long you can keep money in the EPF account.
In such a situation, it should be kept in mind that the EPF scheme allows a person to withdraw 100% of his EPF balance and close the account if he does not join another job within two months. Or the EPF account can be closed at the time of retirement.
Vaibhav Bhardwaj, partner at INDUSLAW, says that if the money is not withdrawn from the EPF account within 3 years from the date of expiry of employment, the account will be converted into an inoperative account.
Under the EPF Act, the amount that has not been claimed for a period of 7 years is transferred to the Senior Citizens Welfare Fund. After transferring to this fund, if the amount is not claimed for 25 years from the date of transfer, then the central government keeps this amount with it.
The money can be kept in the EPF account for a maximum period of three years after the contribution is stopped till the age of 55 years. In such a situation, experts say that interest will continue to be received on the money kept in the EPF account. The interest rate will be the same as notified by the Finance Ministry.
It is true that the interest earned from the EPF account is tax free except in certain circumstances. However, it is tax-free only if there is an active contribution to the EPF account. Deloitte’s partner Saraswathi Kasturirangan says that the EPF account will continue to earn interest as long as it is operational.
The interest earned will be taxable in the hands of the EPF member. Any income through interest in the EPF account after the end of employment is taxable even if the member has already provided five years of continuous service with a contribution to the PF.
Can you continue to contribute EPF if you join the same or another organization after retirement? Akhil Chandana, partner at Grant Thornton India, says that employees aged 58 cannot become members of the EPS.
If the person continues to work beyond this age, the contribution to EPS will stop, but the contribution to EPF will continue. The contribution of both the employer and the employee will be credited to the EPF account.