Soon you won’t have to worry about transferring or merging your Employees’ Provident Fund (EPF) when you change jobs. This was approved at the 229th meeting of EPFO’s top decision-making body, the Central Board of Trustees (CBT), held over the weekend.
According to a press release issued by the Ministry of Labour and Employment on November 20, “Approval was accorded for development of centralized IT-enabled systems by C-DAC. Post this, the field functionalities will move on a central database in a phased manner enabling smoother operations and enhanced service delivery. The centralized system will facilitate de-duplication & merger of all PF accounts of any member. It will remove the requirement of transfer of account on change of job.”
The EPF account number will continue to remain the same even after the job change. Currently, the UAN number remains the same but the EPF account number changes.
What Happens Currently?
As per the current EPF rules, if an EPF member changes his or her job, a new EPF account is opened with the new employer. Hence, the employee needs to transfer the money in the EPF account held with the previous employer to the new account.
This can be done by visiting the member Sewa portal if the Universal Account Number (UAN) is linked to Aadhaar. In case it is not, this needs to be done by submitting a form to the new employer.
Why Is EPF Transfer Important?
This is an important step because according to rules, EPF amount is exempt from tax only if one has five years of continuous service, even if it is across multiple employers. However, there are certain exceptions to this rule.
If the transfer is not done, the period spent with the previous employer will not be included in the period of service. Hence, if you do not have five years of continuous service, the amount you received in the previous EPF account along with interest will become taxable, subject to certain conditions.