PF Accounts which are non operative for 36 months shall not earn any interest, as per the Employees Provident Funds Amendment Scheme which comes into effect from 1st April, 2011. This means all the old PF accounts of employees with old employers, which have become in-operative and have not been transferred or withdrawn will stop carrying any interest. It will therefore become more beneficial to withdraw such PF or transfer the balance into the operative account. It may be noted that withdrawals of PF before 5 years attracts Income Tax.
The Finance Ministry is learnt to have served notices to the PF departments asking them as to why do they not deduct TDS on withdrawals before 5 years. The matter is still under discussion.
The notification for the above amendment is attched.
Tag: Provident Fund