Online transfer of PF accounts service in last week of August

ET :PTI :18 Aug 2013

NEW DELHI: Retirement fund body is all set to launch online transfer of PF accounts on changing jobs by the end of this month, benefiting over 13 lakh subscribers every year who go through a time-consuming process. 

Employees' Provident Fund Organisation (EPFO) has got very encouraging results from the online testing of the service and will be able to launch the service during the last week of this month, a source privy to the development said. 

According to the source, the EPFO will conduct a live testing of service from Monday onwards whereby workers of some selected establishments would be allowed to file their transfer claims online. 

EPFO had started registering digital signatures of employers from July 25, which is a prerequisite for providing the facility and got an overwhelming response from employers particularly from the tech-savvy firms. 

As expected establishments which constitute 80 per cent of the transfer claims from sectors like IT, came forward to register their digital signatures. The body had managed about 6.9 lakh establishments in 2011-12. 

Once the service is launched, subscribers would be able to apply online for transfer claims through their employers. It has set up a central clearance house for the purpose. 

During 2012-13, 107.62 lakh claims were settled, of which 88 per cent were processed within 30 days, as prescribed by the body's citizen charter. 

EPFO expects 1.2 crore claims in 2013-14, including around 13 lakh PF transfer claims. It has planned online settlements of about 10 lakh transfer claims of tech-savy applicants from industries such as IT, this fiscal. 

The body has also planned to reduce the time for transfer of PF account to 3 days through this online service. 
However, according to its citizen charter, the transaction should be completed in 30 days.

PF withdrawal not taxable after 5years of continuous service

Live Mint :Parizad Sirwalla :5 June 2013

As per domestic tax laws, withdrawal of PF is taxed if withdrawn before continuous service of 5 years

As per domestic tax laws, withdrawal of provident fund (PF) is taxable if it is withdrawn without rendering continuous services for five years or more with the employer. On change in employment in the past, if the accumulated PF balance has been transferred to the PF account of the current employer, then the period of previous employment is also included as part of continuous service.

If a person has rendered total continuous service for less than five years with the current and previous employers, if any, and transferred PF balance from the account maintained by the previous employer to the current employer, then the entire PF withdrawn will be taxed in the year of receipt of the accumulated PF. The total of employer’s contribution plus interest thereon, which was not been taxed earlier, will be taxed as salary. Further, the amount of tax benefit claimed under section 80C on account of your contribution shall be taxed, subject to a cap of Rs.1 lakh per fiscal if this was considered as exempt from tax in the earlier relevant fiscals. The interest on your own contribution shall be taxed as “income from other sources”. The tax rate would depend upon the applicable income tax slab.