After leaving job, many people do not get their PF balance transferred from the last employer to the current employer or do not withdraw their PF balance.
Many of us don't withdraw or transfer the pf balance because it kept earning tax-free returns for us.
Government policy is updated for PF withdrawal, as now you have to pay tax for the interest earned by the PF amount. To Avoid getting taxed, you should either transfer the pf balance to the current employer or withdraw the balance at the earliest after leaving the job.
When you leave a job, and even there is no new contribution made in PF account, your account remains operative and earning interest every year. Contributed PF Amount by employee and employer still exempted from tax but the interest earned on the PF amount now taxable and will charged when you withdraw you PF balance. For example, your PF account has ₹ 1,50,000, and you are withdrawal the amount after 5 year, during these 5 years your earn ₹ 10,000 as interest, now you have to pay tax on ₹ 10,000 in the year of withdrawal.
To escape from such condition, you have two options: first, keep the PF to earn taxable interest or withdraw the PF balance after leaving the job.
When can an Employee withdraw PF balance?
As stated in the EPF Act, to declare for final settlement, one has to retire from services after attaining 58 years of age. Accumulated PF amount includes the employees and employer contribution along with earned interest in participation every year. Besides, you will be eligible to get the Employees pension scheme amount as well depending on the years of services.
If leaving the job before 58 years of your age?
As per the rule, the employee who leaves his job before turn 58 years can withdrawal the full PF amount if you are out of employment for 2 months or more after resigning a job then withdraw.
As per the rule, the employee who leaves his job before turn 58 years can withdrawal the full PF amount if you are out of employment for 2 months or more after resigning a job then withdraw.
Nonetheless, in a decision taken at the 222nd central board of trustees meeting of EPFO at June 2018, it had been determined that holder of Employees Provident Fund Organisation (EPFO) who resign from their support is now able to withdraw 75% of the entire provident fund kitty following a month from the date of cessation of support to meet their monthly financial obligations.
If the years of services less than 10 years, you are also allowed to withdraw the EPS amount along with Provident fund balance.
To care of the withdrawals, transfers, advances and other payment-related information EPFO introduced the 'composite form'.
Before applying for PF withdrawal makes sure you're all PF accounts are merged in one.
PF Withdrawal Process
If you have aadhaar number, you can withdraw you provident fund amount easily. Here is the process from which you can withdraw your PF balance with or without Aadhaar card.
Withdrawal without Aadhaar Card
If you don't have aadhaar card use composite claim form to withdraw PF. You should furnish the PAN number if the total services period is less than five years also attach two copies of Form 15G/15H, if valid. If you don't have UAN number, you may mention PF account number only.
Withdraw using Aadhaar card number
If you have Aadhaar card, you can submit the composite claim form directly to EPFO office without attesting of claim form copies by the employer and also attached the cancelled cheque along with the form. Once your process is done, your PF amount will be transferred to your bank account.
The withdrawal process will involve the following conditions:
- PF plus EPS amount withdrawal (below 10years of services)
- PF balance Plus EPS amount (over 10years of services)
- PF balance only and reduced pension (age 50-58; over 10 years of services)
- PF balance only and full retirement (after 58)
Take Away:
It's advisable to transfer your PF balance since it is a kind of savings when you change tasks. For those who are still in service and haven't started their own company, it is much better to move the PF equilibrium to the new company. The transfer procedure was made automatic. And if you have quit beginning your own company, the balance on your EPF account could be moved to the National Pension Scheme.
0 Comments