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POSTED BY ON May 5, 2012 10:37 am COMMENTS (5)
Hi,
I recently changed Job from Company A to Company B, in the same city. My EPF account through company A has been active since about 4 years. I worked for Company B for about 3 months and have left that Job and now I have taken a sabbatical for about a year. I could not tranfer the EPF balance from company A to compay B since they took time to remit my last month\’s contribution till the Full & final settlemet happened and by the time F&F was done, i left the job with Company B as well. Right now I have two EPF accounts and since last 2 months there have not been any incremental contributions into these accounts from any employers since I have left both the jobs.
My question is (1) what shouldd I do with my EPF account opened through both these companies? (2) Should I withdraw the money from the EPF account from company B and continue the Company A account till I take up any other assigment or withdraw money from both the accounts? (3) Will interest be accrued in both the acccounts till I withdraw the money? (4) What will be the tax impact on continuing or withdrawing the money?
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Hi Himanshu,
Till the time Manish comes up with his article on EPF, you can visit http://insight.banyanfa.com/?p=212 wich would provide a detailed analysis of Provident Fund and how to make best out of it. It shall also answer your queries.
Regards
BanyanFA
Himanshu
There is a detailed article on EPF which is coming very very soon (in few days) , but let me clarify your doubts here
1. You have option of withdrawing here as you are unemployed now . You can also let it sit without doing anything , but as per EPF rules, your EPF will stop earning any interest after 3 dormat years ,. so if you are very clear that you get a job within 1-2 yrs , you will then have to withdraw it or transfer to the new one .
2. Does not matter, both are EPF accounts and both are earning interest as of now .
3. No , it will stop once the account is dormant for 3 yrs, it means that activity has to start in that EPF account .
4. If you withdrawa the EPF money before 5 yrs, it would be taxable , after that it would be not
Manish
Thanks Manish for a prompt and detailed reply.
Just a few clarifications…
(1) Since I worked for Company A for more than 12 years but EPF contributions were made for just 4 years, from tax perspective, will it be counted as more than 5 years or less than 5 years in case i withdraw the money.
Also if I were to be retrenched from Company B (rather than resigning), would it change anything i.e. (2) will the tax still be deducted on withdrawl or (3) will the account be termed as dormant after 3 years if I don’t join another company till that time?
Dear Himanshu, as the job was for more than 12Y, the PF withdraw from co. A ‘ll not be treated taxable. interestingly in case of Co. B as you were retrenched, here again your PF withdraw ‘ll not be taxable.
Thanks
Ashal
Also let me clarify that I had been employed with company A for more than 12 years but started EPF contributions only in the past 4 years.