How long can you keep your money in EPF account after leaving your job?
Employees Provident Fund is backed by the government and offers a guaranteed rate of return. EPF account subscriber will continue to earn interest on his/her account balance till the age of 58 years even after leaving his/her employment.
Ankur Choudhary, Co-Founder and CIO, Goalwise replies: EPF is government-backed and offers a guaranteed rate of return, so it is safe. You will continue to earn interest on your EPF account balance even after end of employment till 58 years of age. However, the interest accrued post-employment will be taxable.
I have invested my life savings of Rs 75 lakh in various non-banking finance company (NBFC) deposits. With interest, the investments will grow to Rs 97 lakh after three years. I have a flat worth Rs 75 lakh, which fetches Rs 18,000 in rent. I want to know if the NBFC deposits are a good idea. I don’t want to invest in equity as I have suffered huge losses earlier and my risk appetite is low. Should I sell the flat as the rent is low? If yes, where should I invest to avoid LTCG tax and get a high monthly return? I’m at present unemployed and single.
Prableen Bajpai, Founder, Managing Partner, FinFix Research & Analytics replies: Even if you have invested in the stable companies, you face concentration risk given the broader product basket is the same. Move some money into government-backed products and debt mutual funds. You can consider a mix of Post Office Monthly Income Scheme, Kisan Vikas Patra and tax-free bonds. For debt funds, pick a liquid fund to build a contingency fund along with a low duration fund. While corporate FDs attract tax as per income slab, debt funds are eligible for indexation after three years. Since the flat is your second property and you are looking for more income, you can sell it. However, if you will be taking up a job again or expect increase in rent, you may decide otherwise. If you sell the flat for Rs 75 lakh and invest the proceeds to earn 6%, it can increase your pre-tax monthly income to Rs 37,500. The LTGC tax would depend on year and cost of purchase of property. LTCG will be taxed at 20% with indexation. You can save tax by investing the gain in bonds u/s 54EC within six months of sale—capital gain bonds have a five-year lock-in and currently earn a 5.75% interest. The non-taxable proceeds can be invested in governmentbacked products and debt funds.