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Will I continue to earn interest on EPF after leaving my job and will it be tax free?

Assuming your age is less than 58 years, your account will continue to earn interest. However, the interest earned in this account will be taxable.

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Last Updated: Jul 30, 2018, 06.30 AM IST
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Interest is not credited to the EPF account only when it becomes inoperative—when one attains the age of 58 years and does not withdraw the EPF.
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I worked for a company for 20 years and had been contributing to the EPF for more than 10 years. I lost my job in 2017-18 due to cost cutting. Will I continue to earn interest on my EPF and will this interest be tax-free?

Amit Maheshwari Partner, Ashok Maheshwary and Associates replies:
Yes, you will continue to earn interest on your EPF. Interest is not credited to the EPF account only when it becomes inoperative—when one attains the age of 58 years and does not withdraw the EPF. Assuming your age is less than 58 years, your account will continue to earn interest. However, the interest earned in this account will be taxable.

I withdrew my EPF corpus in 2017-18 when I left my first job. I worked there for less than five years. No TDS was deducted on the amount that I withdrew. Will I have to pay tax on it? Does this sum need to be declared while filing my income tax return?

Rakesh Bhargava Director, Taxmann replies:
Yes, the withdrawn EPF amount is taxable and should be reported as income from salary when you file your income tax return. Any withdrawal from the EPF is taxable, if it is done before completion of five years of service; this can be across multiple employers. However, the withdrawn amount is exempt from tax if your employment has been terminated due to illhealth, or if the employer has shut down his business, or for any other reason beyond an employee’s control that leads to his losing the job. TDS is not deducted on EPF withdrawal if the withdrawn amount is not more than Rs 50,000.

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(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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