EPF Interest Update: How Long Can You Accrue Interest On Your PF Account?
EPF Interest Update: How Long Can You Accrue Interest On Your PF Account?
As long as your EPF account remains active, interest will keep flowing in. But once your account becomes inactive, no additional interest will be credited.

When it comes to employee benefits, one question often comes to mind: how long will the Employee Payment Fund (EPF) account continue to earn interest? Well, the answer is quite simple and straightforward. As long as your EPF account remains active, interest will keep flowing in. But once your account becomes inactive, no additional interest will be credited.

Now, let’s delve into what qualifies as an inactive EPF account according to the EPF scheme. If you decide to retire after hitting the age of 55, your EPF account will be deemed inactive. Similarly, if you permanently relocate abroad or pass away without withdrawing your money within 36 months of it being due, your account will be considered inoperative.

Also Read: EPFO UAN Activate: Here’s How Can An Employee Self-Generate UAN Number

Now, if none of these circumstances apply to you, interest will continue to accumulate on the provident fund balance within your EPF account. But there’s more to it. Any interest you earn after leaving your job will be subject to taxation.

Furthermore, if in certain circumstances you stop working before reaching the age of 55, your EPF account won’t become inoperative until you reach the age of 58.

Adhil Shetty, the CEO of BankBazaar, sheds some more light taxation of interest income. He explains saying that the interest will be taxed in the very year it is accrued. To make it simpler to understand, let’s assume you bid farewell to your job back in 2015 and withdrew your EPF in 2021. The interest you earned on your EPF between 2015 and 2021 would be subject to taxation each year based on the amount earned.

However, if you’ve been diligently working for at least five years, the money you’ve saved in your EPF account won’t be taxed. Remember this—any interest earned on your savings after you stop working will no longer be contributing to the EPF, and thus, it will be subjected to taxation. And, of course, the interest will be taxed in the year it’s earned, based on the tax rates for that year.

The Employees’ Provident Fund is a retirement savings plan established by the Indian government. It is a mandatory contribution scheme wherein both the employee and the employer make monthly contributions to the employee’s retirement fund. The Employees’ Provident Fund Organisation, a federal statutory entity is in charge of overseeing the scheme and ensuring effective fund administration.

What's your reaction?

Comments

https://kapitoshka.info/assets/images/user-avatar-s.jpg

0 comment

Write the first comment for this!