In case of non-transfer of EPF account after changing job, old account continues to earn PF interest (currently 8.5 per cent) but due to the non-contribution in the account the interest earned in the account becomes taxable
Provident Fund (PF) is mainly considered as a retirement-oriented investment option, which is mandatory for an employee. According to the Employees’ Provident Fund Organisation (EPFO) norms, it is better to transfer one’s PF or Employees’ Provident Fund (EPF) account to the new recruiter. However, due to the lack of Universal Account Number or UAN and PF account number and some formalities required for transfer of the EPF account, it has been found that employees don’t transfer their previous EPF account to the new place of work. In that case, according to experts, the old EPF account continues to earn EPF interest rate (currently 8.5 per cent) but due to the non-contribution in the account the interest earned in the EPF account becomes taxable. It also hits the continuity of the PF contribution that may finally dent the pension benefit of the EPF account holder.
Speaking on what happens when an employee don’t transfer its PF account after changing job Mumbai-based tax and investment expert Balwant Jain said, “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 transfer their PF after changing job SEBI registered tax and investment expert Jitendra Solanki said, “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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