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Several employees on leaving one organisation and moving on to another for employment
often forget or delay the transfer of the accumulated provident fund (PF) balance. Big Change:
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Some of them consider withdrawing the PF balance of the previous company at a later date while some are satisfied as the balance
keeps earning an interest rate even when there is no further contribution into that account.
However, during the period when contributions don't get credited to the PF account, the interest rate earned does not remain tax-free.
According to a Bengaluru bench of the Income-Tax Appellate Tribunal (ITAT) ruling, the interest credited to an Employees' Provident
Fund (EPF) account after an individual ceases to be in employment is taxable in his hands in the year of credit.
The rules mandate that the unclaimed amounts that is to be transferred is to be identified on an annual basis by September 30 of each
financial year and transfer to be made into the Senior Citizens' Welfare Fund on or before the 1st day of March every year.
In view of the large time span of 25 years, all exempted establishments should keep accounts and full employee wise details of each
member whose amount is transferred to Senior Citizens' Welfare Fund including PF account number, Pension Account Number, name
and father's/spouse's name of the employee, amount transferred, date of birth, date of joining, last known address of employee along
with bank account number, Aaadhar card number, nominee details, list of family members etc. (wherever available).
Leaving the balance with the old employer may not help much if withdrawing it at a later date is the plan as the interest earned during
non-employment period gets taxed in the year of withdrawals. And, if you have retired at the age of 55, do not let it become inoperative
and withdraw the final balance as early as possible. PF accounts cannot turn inoperative till age 55, yet transferring the PF balance from
previous organisations to the current employer is always a better approach to aim for a sizeable corpus for your retirement.
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1/5/2019 What happens to PF balance after you quit your job - The Economic Times
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