Big news for employees! EPF money will now be tax free, check details here

New Delhi: For retirement, people invest in a variety of ways, but there is no better option than Provident Fund. EPF investors reap a slew of advantages. The first benefit is that investments up to Rs 1.5 lakh are tax deductible under section 80C of the Income Tax Act. Also, there is a lot of curiosity.

Currently, 8.50 percent interest is being paid on EPF investments. There’s also the benefit of interest compounding. To put it another way, the bigger the investment, the fatter the interest. People, on the other hand, frequently withdraw PF funds after moving employment or breaking the investment when necessary. The advantages of doing so are diminished.

If you never withdraw PF money while working, you would receive a lot of advantages when you retire, according to the EPFO rule. To begin, a substantial sum will be saved for retirement. Continuous compounding interest will be available to you. At the same time, the money you’ll get when you retire will be tax-free. It should be remembered, however, that no withdrawals were made prior to retirement.

If no withdrawals from your PF account have been made prior to retirement, you will be eligible for a pension (EPS-Pension). You will get a monthly pension as part of EPFO’s EPS (Employee Pension Scheme). Actually, according to the rules, if an EPF account remains unopened for ten years without any withdrawals, the member’s pension begins. Let us point out that a portion of the money placed by the employer in the EPF goes to the pension fund as well. After 58 years, this pension fund begins to pay retirement pension benefits.

You may also lose money if you are going to retire or have retired but have not yet withdrawn your PF money. According to EPFO guidelines, if you wait too long to withdraw money from your EPF account after you retire, you will have to pay tax on the interest you earned. This is because the tax exemption on EPF interest is only available to employees, and after retirement, a person is no longer considered an employee.

Keep this in mind if you want to withdraw EPF funds while working.

If you require money during the course of your employment and wish to withdraw PF funds, keep in mind that your employment must be for at least 5 years. In fact, if money is withdrawn from a PF account before five years of service, tax must be paid on it. However, if you take money from the fund after five years of employment, you would receive tax-free money.

There are two types of EPF accounts. There is an active account where regular investments are made. At the same time, another account has been inactive for three years with no fresh investments. Every year, active accounts earn income (based on the EPF interest rate). In addition, since 2016, interest (EPF interest news) has been available on dormant accounts. Interest on dormant accounts was suspended earlier in 2011. However, in 2016, this was restarted. If the account is dormant and the account holder is over the age of 58, the interest will be stopped. He will, however, receive the advantage of interest until he is 58 years old.