While switching jobs people sometimes forget to transfer their PF accounts. They leave it as it is and open a new account with the new employer. This results in creation of multiple accounts for the same person.
This is a mistake which a lot of salaried employees do when they change jobs. But, what most people dont know is that if they do this – the money in their account with the previous employer may get taxable.
This is because the law says that this amount will be exempt from tax only if the employee has spent 5 years of continuous service with the same employer.
The law also says that if the employee changes his job and transfers his PF Account from the old employer to the new employer, then the period worked with the previous employer/employers would be included in computing the period of continuous service.
Thus, as stated above, the period of spent with the previous employer would only be included only if the PF Account is also transferred. In case the PF Amount is not transferred, the period spent with the previous employer would not be included.
As the period spent with the previous employer would not be included, it will get taxable as explained in the infographic below
Therefore, if the period of employment in the previous organisation is less than 5 years and you do not transfer the account to the new employer, then the amount received from the previous employer including the interest earned will become taxable on withdrawal.
To know more about the Taxability of PF, you may refer this article – Tax on PF Withdrawl (Explained with Charts)
How to transfer your PF online from old employer to current employer?
The recent changes in EPFO has made it really easy to transfer PF accounts. Now, the employer is assigned a unique UAN number. With this UAN number all his previous accounts will be merged and just with this number the PF can be linked with the new employer.
The PF account can be transferred from the old employer to the current employer online only if your Aadhar is linked with your PF account. Once your Aadhar is linked with the PF account, by following the given below steps, you can easily transfer your PF account.
Steps to transfer PF account online
Step 1: Get the UAN number allotted to your PF account from your previous employer.
Step 2: Go to the EPFO website to create your UAN based login ID.
Step 3: Now, enter your UAN, mobile number and details of current employer like state, establishment number and account number.
Step 4: Check the eligibility for transfer on the EPFO site. Fill in the details of employer’s location and search by name or establishment number from a dropdown menu.
Step 5: Click on Check Eligibility.
Step 6: If your account is eligible, then you can register on the EPFO website.
Step 7: You have to submit a valid photo ID such as PAN card, Aadhaar or Driving Licence. Verify your mobile number with the OTP.
Step 8: After receiving a confirmation message. Continue further.
Step 9: Go to the EPFO Member Claims Portal, and login with the document ID and phone number.
Step 10: In the tabs and click on Request for transfer of account.
Step 11: Fill in PF transfer form.
- Enter personal information such as Name, E-mail, IFSC code of the bank and the salary account number.
- Enter your old PF account
- Enter current PF account.
Step 12: Preview to check if the information is correct.
Step 13: Enter the captcha code for verification and you will receive a PIN. Click “I Agree”.
Step 14: Enter the PIN to initiate the claim transfer.
Alternatively you can also follow the given below process,
Step 1: Fill up the Composite Declaration Form (F-11), in place of Form 11, with the details of your old PF account and the Universal Account Number (UAN).
Step 2: Submit it to the new employer.
Step 3: The new employer will furnish these details on the employer’s portal at EPFO.
Step 3: If UAN is linked with Aadhaar and the previous employer has verified it, then the portal will trigger the auto-transfer process.
Step 4: An SMS will be sent confirming the start of auto-transfer process.
Step 5: Once the first instalment of employee PF is deposited by the new employer and reconciled, the auto transfer will be processed. A message will be sent to the employee for completion of transfer of old EPF accumulation to the new EPF account.
The time period taken to transfer the PF account is around 20 days. It can increase or decrease depending on the time taken by the previous employer to attest the old claim.
Now that you know how important it is to transfer your PF account to your new employer, we hope that you will take the necessary steps to get it done to save your hard earned money.
