New update on PF account: If many such people are found then they change jobs every 2-3 years for more salary and better opportunities.
But with the happiness of increasing salary, people often ignore an important task, due to which heavy tax can also be imposed. Actually, we are talking about the merger of provident fund (PF) accounts here. Merging PF account after changing jobs is a very important process.
Provident Fund
Provident Fund is a compulsory retirement savings program which is being run through the government. Along with this, this scheme is also being run in many countries. This includes contribution from both the employee and the employer, with the intention of providing financial support to the employee upon reaching the age of retirement. The primary objective of the fund is to enable individuals to have a steady source of income during their retirement years.
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PF Account
Whereas when you start a job, you get a Universal Account Number (UAN) from EPFO. Your employer then opens a PF account under this UAN and both you and your company contribute to it every month. And when you change jobs, you give your UAN to the new employer, who later opens another PF account under the same UAN. Due to which the PF contribution of your new employer is credited to this new account. In such a situation, it is very important to merge the old PF account with the new job as well as the new PF account.
PF Withdrawal
It is possible that due to some reasons the amount deposited in the PF account has to be withdrawn. In such a situation, according to government rules, if your tenure with a company is less than five years and the total amount deposited in your PF account is less than Rs 50,000, then you are exempted from paying any tax on withdrawal. However, if the amount exceeds Rs 50,000, then 10 percent TDS will be deducted. On the contrary, if you have completed five years of service then there will be no tax on withdrawal of your PF funds.
