I’ve been a member of the worker provident fund (EPF) for the previous 16 years. My present group, which I’m now quitting after greater than three years, has a non-public PF Belief. I will likely be becoming a member of a brand new firm which is a part of the EPFO.
My present employer claims that the EPFO has stopped accepting funds from personal trusts. Is that this proper? If I used to be to withdraw all the proceeds from my PF account, will or not it’s topic to tax deducted at supply (TDS)? Can my present firm, being a non-public belief, additionally cease paying curiosity within the subsequent three months?
—Title withheld on request
We will be unable to touch upon the precise positions taken by the EPFO with regard to your group.
As per the provisions of the EPF scheme, a person can switch the amassed stability from his EPF account held with the erstwhile employer to that at a brand new employer, no matter the truth that the earlier or new account is an authorized PF belief or held with the EPFO.
As per guidelines, the amassed PF stability due and payable to the worker, as on the date of cessation of his employment, is exempt from tax if an worker has rendered steady service (together with the interval of previous membership with earlier employers) for a interval of 5 years or extra. Any curiosity accruals put up cessation of employment won’t be tax exempt.
Accordingly, if the amassed stability along with your erstwhile employers had been transferred to the PF Belief of your current employer, the interval of contributory service hitherto would even be added to the interval of steady service.
Additional, in case you’ll be able to switch the stability held in your present PF account with the PF Belief to the PF account of your new employer, the identical shall even be added to your interval of steady service. In such a case, as your combination interval of steady service will likely be greater than 5 years, all the amassed stability to the extent specified must be exempt from tax on the time of withdrawal.
A PF member might withdraw the total quantity standing to his credit score within the fund solely on ceasing to be an worker in any institution to which the PF Act applies, offered that he has not been employed in any coated institution for a steady interval of not lower than two months instantly previous the date on which he makes an software for withdrawal.
A PF account turns into inoperative and doesn’t earn additional curiosity, the place an worker retires from service after attaining the age of 55 years or migrates overseas completely or dies and doesn’t apply for withdrawal of his amassed stability, inside 36 months from the date it turns into payable. Till such time, curiosity will proceed to accrue on the PF stability (whether or not in a PF Belief or with EPFO).
Thus, relying in your age and particular information, actual implications would must be evaluated.
Parizad Sirwalla is companion and head, world mobility providers, tax, KPMG in India.