Many of us have the confusion of what is inoperative EPF accounts and how long the EPFO will credit the interest rate. For this, EPFO comes out with clarification about interest on inoperative EPF accounts. Let us see the rule.
Before jumping into the recent changes, let us first understand what is the meaning of Inoperative EPF Account. I will try to explain the same through below image.
You might have now got the clarity that your account will turn to be INACTIVE once you attain the age of 58 years. As per EPFO rules, the retirement age is 55 years. If you do not withdraw the money within 3 years from the attainment of the age of 55 years, then such accounts are called as INACTIVE EPF ACCOUNTS.
Now as per the clarification from Ministry of Labour, your account will fetch the regular interest up to the age of 58 years. Whether you contribute to it or keep it idle, EPFO will credit to such accounts as long as you turn 58 years of age.
Here is the press report of the same.
This new rule will be applicable from 11th November 2016.
Yes, this doubt is there in many employees mind. But with the advent of the internet and all data available on in EPFO portals, I don’t think there is any harm in keeping idle accounts for so long.
However, make sure that your fully KYC complied and you have an access to online EPFO portals. This makes sure that you can view the balance frequently. Also, it will ease your life when you try to withdraw it.
If you found anything unusual with your account, then you can raise the issue immediately with EPFO using EPFO Grievance Cell online.
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Dear Sir,
Please let me know if there will be tax on interest deducted for a PF account in which there are no transactions for 6+ months?
Also, are there are any complications from transferring to a private trust PF account from epfo PF account and vice versa?
Thanks
Dear Vishwanath,
Please refer the above post. Your doubt is already answered there.
Basu, this is a wonderful article. Thanks for explaining in such detail the difference between inoperative and inactive accounts. My account has been in operative (no contributions) since Jul 2015. While your article suggests that interest will be payable by PF department, I noticed that they stopped paying interest from Jul 2018 onwards. What can the remedy be? Looking forward to your advice.
Dear Deepak,
You have every right to claim the interest. Raise an issue with EPFO Grievance Cell Online.
Dear Sir,
If an employee started working at the age of 25 and he worked for 10 years and contributed to PF and after that he joined the new company and he is not included in the EPFO ??Act. So, will they get pension at the age of 58 or not?
And what is the maximum time to apply for pension 10D?
Thnanks & Regards
Sachin
Dear Sachin,
Yes, he will get a pension. Once you turn 58 years you can apply for.
Hello,
I left my job in 2012 and after that no PF has been deposited as I joined a private company with no PF policy. I didn't get my UAN because I left before the UAN creation in 2014.
After a lot of follow ups I got the UAN and can see that the interest got accumulated till 2015. I am reaching 55 years of my age. Is there any chance of getting interest on the remaining amount if I withdraw it now? I will be gaining close to 3 lakhs if so.
thanks,
rajiv
Dear Rajiv,
Raise an issue with EPFO Grievance Cell Online.
Dear Sir,
I left my job on july 1995. And I have not yet withdrawn any EPF amount. As 26 years completed, hence it should be an inactive account now. I was wondering if i can apply for withdrawal through online for an inactive EPF account. How can i get the account details on line and procedure for the same. Could you please let me know on this? Thank you in advance.
Yours,
Onkar B.
Dear Onkar,
I think you don't have UAN and hence apply offline.
Dear Sir, I left my job on july 2015. And I have not yet withdrawn any EPF amount. As 36 months completed, hence it should be an inactive account now. I was wondering if i can apply for withdrawal through online for an inactive EPF account. Could you please let me know on this? Thank you in advance.
Dear Aditi,
You can still apply for EPF online.
Hi Basavaraj
I retired from an MNC during May 2017 and the PF contribution from employer ceased from then. I attained 60 years in Nov 2017.
I did not withdraw my PF anytime even partially . Now it is more than 3 years since my last contribution.
Will I be paid interest till the date of withdrawal?
Thanks & Regards
Dear Raj,
Interest will be payable up to 60 years only for you.
I worked in a private organization from 1991 - 1999. Thereafter, I joined a company in which there was no PF scheme, so I withdrew my PF corpus accumulated till 1999.
In the year 2000, I joined another organization, where I started my PF account afresh.
I worked there till 2018, for 17 years and 3 months, after which I took early retirement.
Although I switched over to a different PF account, since I worked continuously for more than 5 years in the last company, I believe that the PF corpus accumulated since the time of my joining till my leaving this organization should be tax exempt.
Please let me know.
Regarding the taxation of the interest earned on PF after leaving the job, do I need to pay the tax in each year of the accrual, or ONLY at the time of withdrawal of the PF amount?
So, if I have taken retirement at the age of 52, do I need to pay tax each year on interest earned for that year, or only when I withdraw the corpus when I turn 58 years old ?
Dear Sandeep,
You have to pay the tax on yearly basis.
Thank you.
A related question - is TDS deducted by the company each year on such interest?
Or when I do finally withdraw the money four years from now, on turning 58 years old, will TDS be deducted then on the total accrued interest.
I am asking this since that would mean that I need to adjust my tax payment accordingly.
Dear Sandeep,
NO TDS.
Thank you. Actually, I am apprehensive about TDS, since tax is deducted on withdrawing pf before completing five years of service, if the amount is more than Rs 50,000.
Hence, I thought that TDS would be applicable in this case ALSO - ie, on interest earned on PF after leaving the company.
Dear Sandeep,
Sadly your assumption is wrong.
Thank you very much for clarifying. Actually, I had checked with my erstwhile company, and they were not sure if they were supposed to deduct TDS in this case.
So, since there would be no TDS applicable, I will go ahead and pay the full tax amount, on the interest earned.
Dear Sandeep,
Yes.
Thank you.
Two follow up questions
1) So, regardless of how many previous PF accounts I have had in the different companies from where I have withdrawn the PF after leaving the job, the corpus in my last PF account in my last company should be tax exempt, if I worked in the company for more
than five years
2) If I don't withdraw the PF on resigning, after working for more than five years, the corpus accumulated till the time of leaving should continue to be tax - free, regardless of when I choose to withdraw the money from my PF account.
2)
Dear Sandeep,
1) Yes.
2) It is taxable for any such non contributory period.
Thank you.
So for the point no 2, what you are saying is that the interest credited in the non contributory period would be taxable.
However, the corpus accumulated till the time of leaving, after working for more than five years, should continue to be tax – free, regardless of when I choose to withdraw the money from my PF account. Right ?
Dear Sandeep,
YES.
Excellent clarity. Thank you so much
Dear Sundar,
Pleasure.
I had left employment in Jan 2018,at the age of 51 years.
My understanding is that I would earn interest till the age of 58, though it would be taxable.
However, as per the article whose link I am sharing below, the PF account becomes *inoperative*, 3 years after non contribution, and stops earning interest. So, as per this article, I would stop getting interest in January 2021, by which time I would be around 55 years of age.
https://m.economictimes.com/wealth/tax/after-leaving-job-how-long-will-my-epf-account-earn-interest-will-interest-stay-tax-free/articleshow/76506151.cms
https://m.economictimes.com/wealth/tax/will-i-be-taxed-if-i-dont-withdraw-epf-amount-after-retirement/articleshow/66688070.cms
Can you please clarify.
Dear Sandeep,
Check the dates of those articles and check for any recent changes (post this post). As per me, whatever I have written is the latest one.
The date of the article is 22nd June, 2020.
Also, On the Govt of India EPF site, the answer to question no 55 states " ....If the account does not receive any contribution for more than three years, interest won't be credited to the account after 3rd year"
Please check https://www.epfindia.gov.in/site_en/FAQ.php
Thank you
Dear Sandeep,
I have written the above post based on the EPFO Notification. I have shared the image of the same also. Now, it is up to you to decide who is right.
I was working in a private organization for more than 17 years, which I left in January 2018, at the age of 51 years, and am doing my own work now. I haven't withdrawn my EPF amount from the privately managed EPF trust.
1) I understand that interest will be paid on non operative EPF account till the age of 58 years. Will this also be applicable to the privately managed EPF trusts, held by the private organizations ?
2 )Also, do ALL the EPFO rules apply to the Privately managed EPF trusts ?
Thank you.
Dear Sandeep,
1) YES.
2) YES.