Are you an EPF member and feature changed jobs? If so, make sure you switch your old EPF balance to the new account with the modern-day business enterprise. Though the Universal Account Number (UAN) stays identical across EPF bills, remember that having the equal UAN isn’t similar to a balance switch. The earnings tax policies governing the Employees’ Provident Fund (EPF) read with the Income Tax Appellate Tribunal
(IT) choice in ACIT as opposed to Rajnrekar in November 2017 makes it compulsory to merge old EPF money owed into your cutting-edge EPF account or face tax implications. EPF is an obligatory deduction for personnel operating in corporations with 20 or more people. Here, 12% of your essential profits and dearness allowance is contributed via the company, and another 12% is deducted by the business enterprise from your earnings and broughtton your EPF account. When you turn jobs, the new organization opens a brand new EPF account. If you overlook transferring the balance accumulated within the old account into the brand new one, it may increase your average tax liability.
Tax implications
An EPF account with a business enterprise becomes inoperative after you go away from the process. However, the account keeps to earn hobby, that’s taxable, in keeping with the ITAT selection in ACIT as opposed to Dandekar case because you’ve got left the process. If you have taken a ruin from paintings, come to be self-employed, or joined a non-EPF-blanketed company, you’re technical “no longer employed” for the functions of EPF. In this scenario, the interest which accrues every year into your vintage
EPF account becomes taxable even in case you do no longer withdraw any money from the account. If you join a brand new organization blanketed through EPF, the latest business enterprise opens another EPF account. Since you are hired for EPF, the hobby in this new EPF account isn’t taxable. And if you switch the balance to your antique EPF account to this one, the interest on the earlier corpus may even become tax-unfastened.
