If you also invest under Volunteer Provident Fund (VPF), then this news will make you happy. Big planning is being done by the government regarding this. According to the news published in Economic Times, the limit of investment in Volunteer Provident Fund (VPF) under the Employees Provident Fund Organization (EPFO) can be increased from Rs 2.5 lakh with tax free interest. Currently, the interest received on investment more than this is taxable. People associated with this matter said that the Ministry of Labor and Employment is investigating this matter.

The matter is expected to be taken up with the Finance Ministry next year

It is expected that this matter will be raised with the Finance Ministry during the budget discussions of the financial year 2026. This decision can be taken by the government with the aim of encouraging people who come in the middle class and have a low salary to deposit. The government intends that they should deposit as much money as possible in EPF so that when they retire in the future, they have enough money. Earlier, the government had made investment up to Rs 2.5 lakh tax free on the amount deposited in EPF. Tax has to be paid on the interest received on more than this.

Tax benefits from investing in VPF

This decision was taken by the government so that tax can be imposed on the high interest income. This rule was for those people who have a high salary and they deposit more money in EPF so that they can save tax. Similarly, the amount deposited in VPF, the interest received on it and the money you get when you withdraw it. You do not have to pay any kind of tax on all these. That is, investing in VPF gives you a lot of benefits in terms of tax.

When 12% interest was given on PF money,

EPFO ​​has been giving more than 8% interest for the last several financial years. In the financial year 1990, it increased to a record high level of 12%. Till the financial year 2000, it remained at the same level for 11 consecutive years. For the financial year 2022, the interest rate of EPFO ​​was 8.10%. After this, for 2023 it was 8.15% and for the financial year 2024 it was 8.25%.

More than Rs 20 lakh crore deposited in EPF

As per the current rules of EPF, you can deposit as much money as you want in EPF. There is no limit in this. But the government has put a stop to the misuse of this rule. Now if you deposit more than Rs 2.5 lakh in a year, you will have to pay tax on the interest. This rule was made for such people who have high salary and they deposit more money in EPF to avoid tax. Crores of people deposit money in EPF and crores of people are taking pension. A total of more than Rs 20 lakh crore is deposited in EPF.

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Many people do not understand the nuances of the EPF scheme. For example, for how long can you keep money in EPF account after retirement or after leaving the job? This means there will be no monthly contribution to the account? If there is no monthly contribution, will interest continue to accrue on the EPF account balance?

If yes, when will it be available and what will be the interest rate applicable on such EPF balance? If you continue to work in the same or a different company even after retirement, can you continue to contribute to the EPF and EPS account? Here information is being given about some points of EPF account, which the contributing member should know.

For how long can you keep money in EPF account after leaving the job?

EPF account remains active when a person continues to make monthly contribution from salary. However, if you have quit working or retired, it is important to know for how long you can keep the money in the EPF account. In such a situation, it should be noted that the EPF scheme allows a person to withdraw 100% of his EPF balance and close the account if he does not join another job within two months. Or the EPF account can be closed at the time of retirement.

What if the money is not withdrawn even after three years?

Vaibhav Bhardwaj, Partner, INDUSLAW, says that if money is not withdrawn from the EPF account within 3 years from the date of termination of employment, the account will be converted into an inoperative account. The amount which has not been claimed under the EPF Act for a period of 7 years is transferred to the Senior Citizens Welfare Fund. After being transferred to this fund, if the amount is not claimed for 25 years from the date of transfer, then the Central Government keeps this amount with itself.

Will the money in the EPF account earn interest?

Till the age of 55 years since the money can be kept in the EPF account for a maximum of three years after the contribution stops. In such a situation, regarding getting interest on this, experts say that interest will continue to be received on the money kept in the EPF account. The interest rate will be the same as notified by the Ministry of Finance.

How will the interest received in EPF account be taxed?

It is true that interest earned from EPF account is tax free except in certain circumstances. However, it is tax free only when active contribution is being made in the EPF account. Deloitte Partner Saraswati Kasturirangan says that the EPF account will continue to earn interest as long as it is operational.

The interest earned will be taxable in the hands of the EPF member. Any earnings by way of interest in EPF account after termination of employment is taxable even if the member has already rendered five years of continuous service with contribution to PF.

What if you continue to work after you retire?

Can you continue EPF contribution if you join the same or some other organization after retirement? On this situation, Akhil Chandana, partner, Grant Thornton India, says that employees who are 58 years old cannot become members of EPS. If the person continues to work after this age, the contribution to EPS will stop, but the contribution to EPF will continue. The contribution of both employer and employee will be deposited in the EPF account.

The post EPF Account: Will you get tax free interest on your EPF account even after leaving the job? this is the rule first appeared on Rightsofemployees.com.