Some people like to keep the money in their Employees' Provident Fund untouched even after retiring to let it continue to accrue interest. However, certain rules come into play with this, involving taxes, the interest accrual period, and the duration for which the funds can remain unclaimed. Here's how it all works.
Remaining a member
An individual can continue to be a member of the Employees' Provident Fund Organisation (EPFO) even after leaving his or her job, and there is no age restriction on membership.
However, for interest to be paid on the funds, there needs to be an employee-employer relationship and active monthly contributions.
According to a recent amendment, in case an employee retires after 55 years, interest accruals stop after 36 months from the date of last employer contribution to the account if the account holder doesn't withdraw the EPF corpus.
This means after active contributions cease, the funds continue to earn interest, but this is taxable at the account holder's slab rate. More on this later.
Not withdrawing funds
The account becomes inoperative 36 months from the date of last employer contribution.
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