Employees can be heavily dependent on their PF accounts. But, as we all know, an employee’s life is full of uncertainty. What will happen if you have not enough money to contribute in a PF account?
If there are no contributions for 36 consecutive months (3 years), your account becomes inactive. This means that interest no longer accrues. However, note that your principal and the interest earned remain completely safe and you can withdraw them later. If you’ve been unemployed for more than two months, you can withdraw money from your EPF account. However, be aware that if your service is less than five years, the withdrawal may be taxable.
Link PF accounts using your UAN
After completing five years, withdrawals are tax-free. Don’t make the mistake of closing your old account when you move to a new job. Link all your PF accounts using your UAN (Universal Account Number). This will keep your entire service record in one place, ensure consistent interest payments, and avoid tax hassles. People often abandon their old PF accounts or fail to update their KYC, making it difficult to withdraw funds later. Therefore, always keep your Aadhaar, bank, and KYC details updated. If you have multiple PF accounts, merge them into one. This will make monitoring both savings and interest easier.
Understand in brief news
However, if you haven’t completed five years of continuous employment, EPF withdrawals are taxable. Both employee and employer contributions and the interest earned on them are taxed according to your income. However, if you leave the money in the account and it continues to earn interest, it is not taxable. If no contributions are made to the account for 36 months (three years), the account becomes inactive. Until then, interest continues to accrue at the prevailing interest rate. After three years, new interest payments cease. However, your deposit remains safe and you can withdraw it whenever you wish, depending on your eligibility. This means the money doesn’t disappear; it just stops growing.