Can the EPF account be dormant for a certain period?

POSTED BY Srinidhi R ON September 12, 2011 12:33 pm COMMENTS (4)

Hi,

I have been working in the industry for two years now. I plan to go for higher studies next year for two years. I wanted to know if I’ve to close my EPF account before going for higher studies? I’d prefer to park the money accumulated till date in PF account itself for those two years and let it compound. But the payroll desk at my company said that the provision is no longer there. If the account is inactive for a certain period, it will be de activated. So if take out the money I’ll lose the benefit of compounding for these years and have to start all over again at a new company after my higher education. Also, I’ll be taxed for the amount accumulated in my PF account if I withdraw next year 🙁

 

I wanted to know if I can keep the PF account dormant for two years and let my money grow? If not, what is the best option available? 

4 replies on this article “Can the EPF account be dormant for a certain period?”

  1. Shree says:

    Yes in Sept your balance will remain Rs 1 lakh and if you withdraw today it will be taxed as per your current income tax slabs ( 20 % or 30 % )

  2. Jayashree says:

    Hi,
    It does not become deactivated but one can not earn interest on PF balance. hence it is suggested to withdraw or transfer the pf funds once we change our job.

    1. Srinidhi R says:

      Hi,

      Suppose I have 1lakh in my PF balance (incl interest) as on today and I go for higher education for next 2 years. So in Sep 2013 the balance would still be 1 lakh? And if i withdraw it now, how is it taxed? Will it be added to my annual income and taxed according to the bracket I am in?

      Thanks..

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